Germany's Dresdner Bank and Dutch bank ABN AMRO Holding NV may covet a larger slice of lucrative British fund management business, but analysts warned on Wednesday their shopping lists will be limited.
"Some of the smaller quoted firms might get snapped up," one banking analyst told Reuters, adding the price range for quoted asset management companies varied from between around 125 million pounds ($207.6 million) to several billion pounds.
"There's a large range of value out there, but nothing is on offer," he said.
Well-known top performers such as Mercury Asset Management (MAM) are likely to be prohibitively expensive and none of the major players have indicated they are up for grabs.
And the weaker fund firms are not likely to be of such great interest to European banks trying to make an immediate impact on the market rather than turn around a non-performer.
"There's an active trading market for these businesses but some banks feel the prices are too high," John Leonard, banking analyst at Salomon Brothers said.
Banks are not alone in their desire to grab more asset management business, with insurance companies also in the frame. And as with other areas of financial services completely new entrants to the field are also expected.
Retailers like Marks and Spencer have been selling personal financial products for some time but supermarkets and companies such as Richard Branson's Virgin may begin to take on the dual roles of selling products and managing assets by linking up with life assurance or asset management firms.
Last November Dresdner, Germany's second largest commercial bank, announced a restructuring of its global fund management business to bring non-German funds under the management of its newly acquired San Francisco-based RCM Capital Management.
The new group, which incorporates London's Kleinwort Benson International Management and Thornton &amp; Co and is due to be named in March, will have assets under management of more than $50 billion, a quarter of the $200 billion managed asset volume of the whole Dresdner group.
Dresdner said on Wednesday it was interested in taking over a British fund manager and was also looking at expanding its asset management in France and Italy.
This came on top of comments by ABN AMRO this week that it too would buy in the right circumstances.
One analyst said ABN AMRO would regret it had not outsmarted Britain's National Westminster Bank Plc which captured British fund manager Gartmore almost a year ago for 472 million pounds.
Analysts said the problem for both ABN and Dresdner would be satisfying their desire for increased market share without sacrificing shareholder value by paying over the odds for an acquisition.
And because everyone wants a piece of the action, prices are likely to rise further. Shares in British fund management firms rose on Wednesday after the Dresdner comments.
MAM shares were up five pence at 1,260 pence in the early afternoon while Edinburgh Fund Managers shares were up five pence at 607.5 pence and Henderson shares were up 32.5 pence to 1,277.5 pence.
Analysts singled out Edinburgh Fund Managers and Ivory and Sime as two of the weaker share performers in the sector. "There are some asset management companies with quite depressed share prices," said one.
($1=.6021 Pound)
