The acquisition of FRSGlobal by Wolters Kluwer's financial services unit is notable because the two companies are focused on more than just regulatory compliance, according to analysts.
In addressing risk and compliance, "many of the technology vendors … focus really on the compliance part … but that doesn't necessarily manage risk," Rodney Nelsestuen, a senior research director at TowerGroup, said. "Most of the banks that failed were compliant, so risk management is a very different thing."
Wolters Kluwer Financial Services announced Thursday that it had acquired the Brussels company. It did not give a price.
Wolters Kluwer Financial Services is "one of the few that crosses over from just doing compliance to actually looking at the risk itself," Nelsestuen said.
Brian Longe, Wolters Kluwer Financial Services' chief executive, stressed that this was a key reason why FRSGlobal is an appealing buy.
"They provide us with the regulatory reporting and risk and the only unified common data platform for reporting … in the industry," he said. "It actually helps complete our look at what we can provide relative to the pillars of risk inside the banking community."
The two companies have worked together since early 2009, and Longe said it became important for Wolters Kluwer Financial Services to take on FRSGlobal's product lines and its expertise, particularly in response to customer demand.
The parent company Wolters Kluwer has been "expanding organically and through acquisition throughout the United Kingdom as well as Germany, India and China throughout the last 18 months," Longe said, which has made it more important that the unit and FRSGlobal pool their expertise to serve this international customer base.
"Our customers across the globe have asked us for support for international and multinational regulatory information and compliance," he said.
Nelsestuen said that FRSGlobal's focus on Europe would give Wolters Kluwer Financial Services, of Minneapolis, a stronger stance as it focuses on expanding throughout the Continent.
Though the U.S. and Europe have been subject to regulatory overhauls, those changes will take time to solidify, and this acquisition indicates that Wolters Kluwer Financial Services is focused on the future of regulatory compliance.
"It's really good timing, from the point that they are ahead of the game," Nelsestuen said.
Longe agreed that this purchase also prepares Wolters Kluwer Financial Services for the new global regulatory landscape. "The regulatory environment is strengthening across the world, and given the financial crisis, it's a highly topical and required place to be," he said.
Wolters Kluwer Financial Services serves over 14,000 financial services companies, and FRSGlobal serves over 1,000, including 41 of the world's top 50 banks.
John Jay, a senior analyst with Aite Group LLC, wrote in an e-mail that: "Compliance and risk management and their reporting are very close cousins with each other. The marrying of these functional roles from a service provider perspective will allow [Wolters Kluwer Financial Services] to present them as a unified offering."
The changing regulatory landscape also places requirements on Wolters Kluwer Financial Services that are better addressed sooner rather than later, Jay said. "With a growing global regulatory conservatism, the monitoring of business risk are important issues as well as increased reporting requirements that must be addressed going into 2011," he wrote.
