Half a world away from its New York headquarters, Bankers Trust Corp. is making its mark in mutual funds.
Bankers Trust Corp. is a leading manager of mutual funds in Australia, with $8.75 billion of assets under management as of December 1997-a fourfold increase since 1990.
Through its Australian investment management arm, BTFunds Management, the bank has also accumulated $15 billion in institutional assets, making it the country's third-largest institutional manager.
By contrast, Fidelity Investments, the giant of the U.S. mutual fund industry, exited Australia's retail market in 1993 after a seven-year stint. Fidelity has continued as an institutional manager.
"Bankers Trust is well regarded here," said David Catling, a principal with Mirador Research, a Sydney-based market research consultancy specializing in asset management. "People here know that it's part of a U.S. institution, yet it's viewed as home-grown."
Even Nicholas Lopardo, chairman of State Street Global Advisors, a Bankers Trust competitor throughout the world, admires what BT has done in Australia. "They have a very competitive group of professionals that have built a strong business."
How Bankers Trust managed to take the lead in retail funds in a country on the other side of the world has much to do with getting to the marketplace early, some good market calls in the late 1980s, and an absence of world-class competition.
Bankers Trust's strongest competitors are a host of local bank and life insurance firms, such as Commonwealth Bank and Lend Lease-names largely unknown outside the region.
"In a nutshell, we got to the game early and we established ourselves as an impressive player," said Ian Martin, an Australian who is chairman of BT Funds Managements, the bank's money management arm in Australia. Unlike other U.S. financial services companies, Bankers Trust began building an investment banking and money management business in Australia in the early 1970s. Last year, BT Australia/New Zealand earned $103 million, about 11% of the bank company's bottom line. According to estimates, a little more than half of that comes from the money management business.
In the past three years, Mr. Martin's Sydney-based unit has transcended its roots as a manager of money for local clients. The operation now specializes in actively managed accounts for BT institutional clients around the globe. "We have a mandate to grow the organization globally," Mr. Martin said.
But Bankers Trust continues to build its local "managed funds" business, as mutual funds are called in Australia.
"In the early 1980s, we saw an opportunity on the retail side and we were relatively early in establishing a family of funds," Mr. Martin said.
It didn't hurt matters that Bankers Trust correctly saw the 1987 crash coming and began backing away from equities. Though the bank was initially criticized for its conservative posture in the midst of a growing market, BT "was vindicated after the crash and that helped build an enormous reputation for them," said Mr. Catling.
In the past decade, the bank has built a retail presence with the help of television advertising and through the enlistment of financial planners and retail brokers. In plumbing Australia's retail market, the bank has been helped by a wide array of investment choices than its competitors.
"Today, we manage all major asset categories from Australia domestic to international, both equities and fixed income," Mr. Martin said.
But while Mr. Martin's operation might be the biggest retail name in Australia-a country of only 18 million people-it will have a tougher time holding onto that title in the coming years.
Changes are afoot in Australia's parliament to liberalize the country's compulsory retirement savings plan so that employees will be able to pick their own funds rather than merely accepting a company chosen for them by their employer. This reform is viewed as potential boon for the country's retail fund industry.
With Citicorp beginning to build a retail presence in Australia and Fidelity eying a reentry into the marketplace, BT will have to fight to maintain its dominant position in a higher-stakes game.
Observers don't question that Bankers Trust is up to the challenge. "They may have developed a bit of middle-aged spread, but they are still aggressive," Mr. Catling said.