OREANDA-NEWS. Fitch Ratings does not expect the upcoming incorporation of HSBC Gestao de Recursos (HSBC Gestao) by Bradesco Asset Management (BRAM) to significantly change the Brazilian asset management industry's competitive landscape. Fitch believes the asset managers have complementary areas of expertise that could contribute to positive synergies.

This integration is part of the sale of HSBC Bank Brasil S. A. - Banco Multiplo (HSBC Bank Brasil) to Banco Bradesco S. A., which was approved yesterday by the Administrative Council for Economic Defense (CADE) 10 months after the initial sale announcement. The transaction encompasses all of HSBC Bank Brazil's operations, including its asset manager unit.

HSBC Gestao is well regarded for its global platform and experience in offering products with exposure to international assets to its affluent and private banking clients in Brazil. The increased demand for these products could make them an important addition for the diversification of BRAM's product suite. HSBC Gestao also brings a recognized platform and portfolio management track record in the Funds of Funds segment, which could also be a beneficial integration.

HSBC Gestao's platform will have access to the broad and diverse distribution channels of Banco Bradesco upon completion of the integration process. In addition, BRAM stands out in the Equity funds segment with good performance and solid coverage of its investment universe, which could generate cross selling opportunities to HSBC Gestao's current clients. As to the operational structures, Fitch believes there will be room to increase the level of automation and improve the systems framework after the integration of the two asset management platforms.

Combining these asset management companies may present a few challenges including preservation of investment processes during the transition and client retention. Cultural integration of the teams is also an important phase, and some personnel shifts are possible. An opportunity for the combined platform will be to enhance the current offering of multimarket products. Integration of the teams might result in new initiatives for this asset class.

BRAM is the third largest asset manager in Brazil, with BRL432 billion in assets under management (AUM) and 13.8% market share. HSBC Gestao is the seventh largest, with BRL80 billion in AUM and 2.6% market share in April 2016, according to the Brazilian Association of Financial and Capital Market Entities. The combination of these two asset managers should result in the second largest manager in the country, with approximately 16.4% market share.