A Conversation with Paul T. Bateman: Dealing with Global Multinational Mergers

Abstract

Paul T. Bateman is Global Head of J.P. Morgan Fleming Asset Management for Europe, Asia and Japan. He has been actively engaged in the financial services industry since 1967 after graduating from Leicester University. He began his career in the Actuarial and Technical Department at Save & Prosper and advanced to Group Marketing Manager and then Vice-President for Marketing of First Investment Annuity Company, a U.S. subsidiary of Save & Prosper, in 1972. In 1988 he was appointed Chief Executive Officer of Save & Prosper Group Limited and a Director of Robert Fleming Holdings Ltd. Paul also has served on the Boards of LAUTRO, the Life Assurance and Unit Trust Organization, and the Personal Investment Authority before being named Chairman of Robert Fleming Asset Management Limited in 1995. Following the merger with Chase Manhattan in August, 2000, he was named Global Head of Chase Fleming Asset Management. Following the J.P. Morgan-Chase merger in December, 2000, he became Global Head of the combined asset management business outside of the U.S. J.P. Morgan Fleming Asset Management operates across 4 regions: the Americas, Europe, Asia and Japan. With assets under management of over $600 billion being serviced by nearly 700 investment professionals, J.P. Morgan Fleming Asset Management is one of the premier global investment management companies in the world. Nicholas Mathys: Could you briefly go into some of the basic operations in terms of size, geographical coverage and so on of J. P. Morgan-Fleming Asset Management? How have the mergers, first with Chase and then with J. P. Morgan, affected your operations? Paul Bateman: We now have something like six hundred and twenty (620) billion U.S. dollars under management globally which puts us comfortably into the top ten of asset management businesses worldwide. About a third of those assets are fixed interest in cash and two thirds in equities. If you take it from the Fleming standpoint which was where I came from, pre-merger we managed 90 billion U.S. dollars. Then post-Chase that went up to about 160 billion U.S. dollars. Fleming's assets were primarily equity and Chase was primarily cash with a little bit of fixed interest and some equity. J.P. Morgan has added the remainder ($450 billion) in roughly equal proportions of cash, equity and fixed income. So you can see that the merger was transformational; moving the companies from pre-merger state of mid league to post-merger state of being clearly in the top ten. We operate across all of the key markets in the world now, U.S., Europe, U.K., Japan, Asia, with a growing engagement in emerging markets. The culture issue is one where we now have a truly global brand, but a global brand which has genuine local decision making and a local face in each of the geographic areas in which we operate. So, for example, in Asia we operate with a management team whose career commitment is to Asia and we are seen as an Asian company with a global resource behind it. Likewise in Japan, the U.K., Europe and the United States. N.M.: What kind of leadership challenges did the merger create for you? Paul Bateman: I think the major challenge was that prior to the merger you had organizations which had closely knit management teams and which were operating with flat management structures. The size of the merged entity made this impossible to sustain. For example, I will relate to you a conversation I had with one of my senior managers yesterday. He said that before the merger he was very close to the strategy of the company involved in giving input directly into the strategy decisions. What happened post-merger is that, because of the increased size, there was an extra layer between him and the top and he found himself cut off from strategy discussions. And because of the wider range of new business introductions being given he was busier and was focusing much more on process and task execution rather than strategic development. …