More mergers seen among mutual funds

The government is tabling a draft bill in the next few days giving mutual fund companies the right to manage private investment funds, sources said. The new legislation, in line with a European Union directive, is expected to spur mergers between mutual fund and portfolio investment companies. The mergers are seen as a major boost to financial groups, as they will facilitate cost-cutting efforts and open the way to more mergers among non-affiliated concerns with synergies. Mergers among mutual fund companies as such seem to be nearing an end. The absorption of Intertrust by EFG Eurobank’s mutual fund arm will, when completed, create a company that will manage over 7 billion euros and have a 33 percent market share. EFG Mutual Funds alone has a 22 percent market share. The mutual fund market is now dominated by the subsidiaries of EFG Eurobank, National Bank and Alpha Bank, which, between them, currently control 60 percent of the market. Sector managers say that concentration was necessary because of the stagnation in business and rising costs. The same sources said that there is a possibility of further mergers, especially among the biggest companies, if shareholders agree. These mergers will be facilitated if the parent companies themselves, that is the banks, agree to merge. Our sources also claimed that the number of mutual fund management firms in Greece is low and that the entry of additional players would attract customers. They hold up the example of Ireland, which, with a far smaller population, has many more mutual fund firms. Still, in Greece investors appear reluctant to put their money into mutual funds. At present there is a small, but constant, daily outflow of capital from domestic equity and bond funds. This, however, is not indicative of a general trend because different types of funds are in favor at different times. Investor moves away from mutual funds are also the result of banks’ actively pushing other products that are more profitable, such as consumer and housing loans and credit cards. Phaidon Tamvakakis, managing director of Alpha Trust, underscores the fact that Greek investors are rather erratic in their behavior. «Saving regularly is a habit that Greeks do not have and will likely not acquire for a long time. We are also partly responsible because, as a sector, we have not made a concerted effort to highlight the virtues of intelligent saving,» he told Kathimerini, adding that although Greeks have large sums deposited, they do not have regular savings habits.

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