GLOBAL - Concerns are already surfacing as to the fate of Citigroup Asset Management's prized fixed income team on the back of the sale of the group to Legg Mason.
The acquisition will see Legg Mason’s fixed income subsidiary, Western Asset Management’s assets under management rise to US$490bn, overshooting PIMCO’s $464bn, as of 31 March, 2005.
Legg Mason is highly regarded as a parent by its subsiduaries, and has to date been successful in managing its acquisitions efficiently. But due to the overlap in functions with Western AM, the integration of Citigroup’s fixed income team is different to previous acquisitions Legg Mason has made.
Of particular interest is what happens to Citigroup’s high yield and emerging markets teams headed up by Peter Wilby. Citigroup AM’s fixed income team is based in New York, while Western AM is based in Pasadena on the west coast.
“I sense that Peter Wilby would not be too excited to have his group merged within Western, and I think he wants to keep his group in total,” said one industry source. “Peter has demonstrated in the past that he is very proud of the history of the group from the Salomon days and obviously that’s the crown jewel of Citigroup Asset Management.
Western already has a core plus product, which is very strong in the US and the question is what happens to the high yield and the emerging market debt parts of Peter Wilby’s group?
“My sense is that the fixed income group at Citigroup would either want to be a left alone entity within Western, or there’s the potential for that whole group to go elsewhere or start their own firm.”
A spokesperson for Citigroup Asset Management said: “Everyone, across the board is very concerned about continuing to do things in the best interests of clients. While what the ultimate structure will be has not been decided, both Peter Wilby and Jim Hirshmann [president and CEO, Western AM] are very committed to ensuring client needs are met, and I think both of them would be very troubled if there was any indication otherwise.”
Western AM, which currently has $211.4bn under management, declined to comment.
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