Will the European Crisis Produce Another Neuberger Berman?
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Wednesday, August 10, 2011

Will the European Crisis Produce Another Neuberger Berman?

Several U.S. mutual funds have European parents (see chart below). What does the recent market volatility, particularly, mean for those fund firms?

A case in point is Los Angeles-based TCW, which is backed by French bank Societe Generale. SocGen's stock (PINK:SCGLY) has dropped more than 40 percent in the past 16 days, taking hits last week after reporting a profit dip (see Bloomberg) and again today as rumors swirl about a possible downgrading of France's government debt (see Bloomberg, Reuters and Reuters again). Today SocGen executives held a press conference to reassure investors that the bank is solvent.

A spokeswoman for SocGen referred inquiries to TCW, and a spokesman for TCW told that the rumors swirling around SocGen "have no impact on TCW."

Yet even in a worst-case, nightmare, collapse scenario for SocGen, TCW executives should draw comfort from Neuberger Berman's example: when Lehman Brothers collapsed, Neuberger executives seized the opportunity to do a management-led leveraged buyout (LBO), one that looks pretty successful two years later [see, 5/12/2011]. So if disaster strikes, TCW might just find itself independent.
European Parents of U.S. Mutual Fund Firms
Ticker Company (Fund Firm/B-D) Share Price 8/10/2011 Percentage Change Since 7/25/2011
PINK:AZSEY Allianz SE (Pimco) 10.13 -25.09
NYSE:CS Credit Suisse Group AG 28.78 -23.5
NYSE:DB Deutsche Bank AG (DWS) 40.36 -27.17
LON:OML Old Mutual plc 104.8 -20.86
PINK:SCGLY Societe Generale SA (TCW) 6.46 -40.37
LON:SDR Schroders plc 1404.17 -16.1
NYSE:UBS UBS AG 13.61 -22.27
BIT:UCG Unicredit SpA (Pioneer) 0.967 -26.63
Source: Google Finance

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