GLOBAL - Citigroup has become the latest investment bank to lose senior members of its transition management (TM) business as investment consultants Mercer claim pension funds are now favouring the security of the asset management model.
Ben Gunnee, European director at Mercer Sentinel Group, predicted there could be more closures of investment bank transition teams as banks looked for ways to cut headcounts.
He said: "Many clients are moving towards the asset management model for transition management because they don't want their manager disappearing mid transition."
Global Pensions understands the Citi TM business was comfortably profitable and that the departures followed discussions on a proposed restructuring which would have seen the unit relocated to either the custody business or the trading floor. It is understood the London based team was unhappy with both options.
According to a spokesperson, Citi continued to have origination and execution capabilities in Asia and Australia, though not in EMEA. He said that while EMEA had no origination capability Citi could still execute global transitions as the program desks remained in tact.
Citi has not named a specific head of US transition management, with the business now reporting in to Rick Bartlett, who is head of the Americas Equities business.
Gunnee commented: "The Citi team were an experienced outfit and it's a shame that pension funds will now have less choice when looking for a transition manger."
Rick Di Mascio, chief executive of Inalytics and chairman of the T-Charter said: "The loss of Citi from the sector means there are even fewer credible providers of transition management out there."
Tim Wilkinson, former global head of TM at Citi, was unavailable for comment.
Citi released the following statement: "Citi remains committed to the Transition Management business. We believe we have unparalleled global execution capabilities and a depth of advisory experience in the Americas, Asia and Australia."
The Pensions Regulator (TPR) has set out plans to use "new regulatory initiatives" with over 1,000 schemes as it aims to tighten its regulatory grip and boost member outcomes.
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