Growth on cards for asset managers

The chief executives of asset management firms were among the most optimistic in the financial services sector, according to an annual survey of bosses by accountancy firm PricewaterhouseCoopers. More than half the chief executives of insurance firms were also confident about company prospects, driven by growth in overseas markets, particularly China.

But the report found that prospects for most financial services firms are hampered by the cost of relocating and retaining staff in emerging markets. They are also highly concerned about the impact of tightened regulation in the wake of the banking crisis.

International banks based in countries with small populations faced the biggest challenges. More than 80 per cent of chief executives in the banking sector saw over-regulation as the biggest threat to growth, while more than two-thirds said that they will be supporting government policies focused on investment in domestic markets.

The report said that there will be "heightened risks if banks are required to buy government debt or support local businesses".

The PwC CEO survey found that three-quarters of asset managers believe the emerging markets will be sources of growth while 30 per cent are looking to make cross-border acquisitions. More than half of insurance bosses believe emerging markets will be more important versus 44 per cent who see domestic markets as offering high growth potential.

A quarter of them expect to make overseas acquisitions. But more than a third of asset managers believe that a lack of key skills dealing with and in new markets is their biggest threat.

Allan McGrath, assurance and asset management partner at PwC in Scotland, said: "Asset management CEOs are feeling confident about the future, however, what is increasingly apparent is that innovation will be the key to future success."