Bankers Trust New York Corp.'s global investment executive has some advice for U.S. money managers looking to expand overseas: If you plan to rely on your American name and ways of doing business, you might as well stay home.
"One of the biggest fallacies one could fall into-and American institutions tend to be very good at it-is they think what products and delivery channels work there will work here," said Paul M. O'Donnell, managing director. "It's rubbish."
Harsh words, but the Australian-born Mr. O'Donnell knows what he is talking about. Bankers Trust cannot use its familiar U.S. moniker, BT, in the United Kingdom.
"The joke here is we're working for British Telephone," he said. The phone company has a lock on the use of the initials in the United Kingdom, so the bank must use its full name.
Mr. O'Donnell arrived at Bankers Trust's London office last year, via Hong Kong, to lead an expansion into the retail money management business in the United Kingdom and continental Europe.
The bank is already a well-known institutional money manager in those markets, as well as in Asia and in Australia, where it has its largest operation outside New York. According to a report released last year by Cerulli Associates and Lipper Analytical Services, Bankers Trust was the fourth-largest U.S. mutual fund firm abroad, with more than $5 billion of assets overseas.
As Mr. O'Donnell sees it, executives who go abroad for U.S. fund companies need to quickly show their parent companies at least some signs of success or run the risk of being called home.
"You have to start seeing some trends, even if you are not yet seeing big bucks," he said. Trends should "begin emerging from BT's efforts in Europe in less than five years," Mr. O'Donnell added.
Sometimes trends will emerge in unexpected places, as Bankers Trust's investment business in Germany proves. The bank attempted to tap Germany's institutional investment business at the beginning of this year, but the effort stalled, Mr. O'Donnell said.
"It was like hitting our heads against a brick wall," he said.
Yet the retail investment business boomed, and Germany is now the bank's fastest-growing European market.
"It crept up on us," he said.
The reason for the bank's popularity among retail investors in Germany is unclear, he said. But he points to the relative inactivity of the German stock market and to German investors' growing desire to switch their money out of mark-denominated investments in preparation for a conversion to Eurodollars.
While Bankers Trust has its hands full with the booming German investment business, the bank's U.K. business remains stagnant, Mr. O'Donnell said.
British investors already have 2,000 funds to choose from, leaving little room for an unknown newcomer, Mr. O'Donnell said. The market is also chock-full of products with tax incentives, such as Peps-mutual funds in tax-free "wrappers."
For now Bankers Trust is looking to launch new products in its other European markets that will be managed out of the bank's Sydney, Australia, office, Mr. O'Donnell said. The bank's current European product line consists of funds designed to mimic its U.S. lineup. All funds BT offers outside the United States are domiciled in Dublin.
Bankers Trust and Mr. O'Donnell will continue to focus their European efforts on markets where they think they can do well-like Germany, France, and Switzerland-and less on the United Kingdom.
"As an international player here, we're no Mercury or Schroeder," he said, naming two of the biggest financial firms in the United Kingdom. "Nor do we want to be."
