Coombe still standing as heads roll at BT

ROB Coombe started last week as the head of retail at BT Financial Group. He finished it as the most senior BT executive still standing following Westpac Bank’s decision to pay $900 million to buy BT from its US parent, the Principal Financial Group.

Coombe, who played a heavy role in the negotiations, has been appointed head of the asset accumulation division of what will become the combined Westpac/BT wealth management business.

The role will leave Coombe with responsibility over all investment products, distribution, corporate superannuation and margin lending within the combined business, as well as BT’s wrap account.

Coombe’s fate is in stark contrast with that of BT’s chief executive Ian Martin, chief investment officer Gary Symons and chief operating officer Graeme Fowler, all of whom will not continue with the funds management business following Westpac’s buyout.

Martin, who orchestrated the sale of BT to Principal for $2.1 billion in 1999, played a key role in thwarting Westpac’s attempts to buy the funds management group at the time.

Martin had argued that Westpac did not present a good cultural fit for BT and that its key funds management staff would not work for the bank.

Asked last week why Westpac was now a suitable parent for BT, Coombe said BT’s business had changed dramatically over the past three years, moving away from just the supply of pure funds management services.

“We have significantly diversified BT’s business over that time, so that we are a much more platform-oriented business. In 1999, the [BT Wrap] was [worth] $100 million, now it is close to $7 billion,” he says.

Coombe also says the attitude of financial advisers towards the major banks has altered significantly since 1999.

“There was back then adviser sensitivity around the banks buying independent [dealer groups],” he says.

“[They feared the banks] were going to take their clients away from them. My sense is that attitude does not exist in the market any more.”

Westpac’s decision to buy BT will make the bank the fourth largest retail funds manager in the country, with more than $30 billion of funds under management.

But all of the major investment research groups — van Eyk, Assirt, Lonsdale Securities (Lonsec) and Investorweb Research — last week responded to Westpac’s move by placing a blanket hold on all BT funds, citing the uncertain future of key BT staff as a critical issue.

At the time of going to print, BT’s head of equities, Marcus Fanning, and head of domestic fixed interest, David Fraser, were yet to decide whether they would continue with the group.

There is also a doubt over the future of BT’s entire domestic funds management team.

At this stage, it appears to be Westpac’s intention to integrate BT’s Australian equity team with that of Sagitta Rothschild, which Westpac acquired only four months ago.

The move would create a combined Australian equity team of 25 people if there were no departures, a size analysts consider excessive given that Westpac has flagged cost savings as one of the key drivers of its acquisition of BT.

The uncertainty will also apply to BT’s international equities team. BT has indicated that its international equity portfolio managers will be retained until the sale to Westpac is completed in late October, but says its offshore funds management capabilities will then be outsourced to an as yet unnamed global investment manager.

The Lonsec and Investorweb research groups also announced last week they had placed all Sagitta Rothschild funds on hold while they assessed the implications for the group of Westpac’s purchase of BT.

The chief executive of Sagitta Rothschild, Peter Martin, and the group’s managing director of distribution, John Tuxworth, have already announced they will not continue with the group.

However Guy Strapp, the managing director of investments at Sagitta Rothschild, will head up the investment management unit in Westpac’s new combined wealth management business.

Westpac has stated it will retain the Sagitta Rothschild brand, which was adopted only after Westpac’s purchase of the then Rothschild Australia Asset Management, for the time being. But the bank says it will consider the future of both the Sagitta and BT brands.