Challenger signs distribution deal with CSFB

Challenger Internationalhas secured a distribution alliance deal withCredit Suisse First Boston(CSFB), moving the group a step closer to its goal of entering the private client advisory market.

The deal between both financial services firms comes little more than a month after Challenger held private client distribution talks withMerrill Lynchand CSFB announced its exit from the Australasian retail market.

Under the terms of the deal, Challenger will acquire CSFB’s private client share advisory business. Challenger will also keep hold of CSFB’s domestic and international research capabilities.

Challenger managing director Bill Ireland says the claim of CSFB’s private client business provides the group with a distribution channel to further expand its product range. Ireland says the deal also provides Challenger with real synergies with the group’s existing corporate finance, corporate superannuation and corporate lending businesses.

It is understood, that in return, CSFB will have access to Challenger’s financial planning network. Challenger has in excess of 10,000 financial planners across Australia.

As part of its plan to push into the private client advisory market, Ireland says Challenger plans to grow the private client business over the coming year, with the aim to have at least 120 quality advisers by the end of 2002.

Last month, Challenger was in talks with Merrill Lynch about acquiring its private client division. Those talks broke down when negotiations were abandoned after a raft of differences could not be resolved in a satisfactory time period.

At the time, it was rumoured that Challenger was willing to pay $40 million for Merrill Lynch’s client division, however, many of Merrill’s 100 private client advisers and support staff were apprehensive of joining Challenger, and were reportedly in talks with UBS Warburg and Salomon Smith Barney.

Earlier this month, Credit Suisse First Boston Corp (CSFBC) surprised the funds management industry by closing its Australasian retail operations, and forfeiting its NZ retail clients to fellow fund manager,Macquarie Financial Services.