Deals by ABN Amro and Allianz Group to buy U.S. asset managers reflect European financial companies' growing appetite not only for customers here but also for U.S. product sophistication and expertise.
Certainly, part of the attraction is a widespread expectation in Europe that a maturation of the markets there will force asset managers to compete in ways already commonplace in the better-developed U.S. market.
An equally important force is the globalization of competition between the biggest financial firms.
A U.S. presence is "crucial in order to be a global financial player," said Richard Lips, a spokesman for Frankfurt-based Allianz.
He added: "If you want to buy the best cars, you buy German. But if you want to buy the best asset management products, you go to the United States. The continental European market will never reach this expertise in the next few years on our own."
ABN Amro, of Amsterdam, is to pay $825 million for Alleghany Asset Management Inc., a subsidiary of the New York insurer Alleghany Corp. Allianz agreed to pay $2.22 billion for Nicholas-Applegate, San Diego.
To be sure, the deals, both of which were announced Wednesday, would add assets and improve U.S. market access.
Alleghany's $45 billion in assets under management would increase ABN Amro's global assets under management by 40%, to $155 billion, and give ABN Amro access to 550 institutional clients in North America. It would also add "proven expertise in managing U.S. equities and fixed income," said Tim Cross Brown, head of ABN Amro Asset Management.
Allianz's deal to buy Nicholas-Applegate would give it a second U.S. asset manager and add $45 billion of assets under management to Allianz's $604 billion. Though Allianz continues to look in Europe and Asia for potential future acquisitions, buying Nicholas-Applegate is about finding an asset manager with the best fixed-income and equity expertise, Mr. Lips said.
Allianz made its first asset management inroads in the U.S. in November 1999 when it purchased Pimco Equity Advisors, Newport Beach, Calif. Assets in two of Allianz's mutual funds are managed by Pimco, and it is likely Allianz will produce funds managed by Nicholas-Applegate, Mr. Lips said.
Analysts agree that acquisition deals by European financial companies are part of the effort overseas to modernize.
"As global consolidation moves forward, European banks think they need to improve their expertise and build up critical mass," said Dion Darham, an analyst with Arnhold & S. Bleichroeder of New York. "As Europe builds one true, single market, the firms with the largest assets under management that will win out."
Katrina Blecher, an analyst with New York's Sandler O'Neill & Partners, said European companies want to "play in the United States" to get access to customers and take advantage of the strong economy and future asset appreciation.
"They are buying intellectual knowledge and capability and experience," she said. "They want to transfer that knowledge and make it fit into the changing European environment. Or, make the European market fit U.S. expertise."
Ms. Blecher said the impetus is the possibility of reform of the European pension market. If it does come about, the European retirement system will look much more like the American model of personal savings plans such as IRAs and 401(k)s, and Europe wants to be prepared, she said.
Francis de Regnaucourt, an analyst with Ernst & Young, said reform won't happen overnight, but that the firms prepared for it will benefit the most.
"Transplanting the skills of U.S.-based asset managers is much more important than transplanting the assets," he said. "As European countries shift away from subsidized benefits and more toward individual savings, the U.S. system is the global model for retirement savings."
