COMPETITION in the wealth management industry will be permanently damaged if mid-tier fund manager IOOF is unable to live up to the expectations placed on it following National Australia Bank's merger with AXA Asia Pacific, rival suitor AMP has warned.
IOOF, which is due to buy AXA's North retail investment platform to help get NAB's $13 billion bid back on track, would have to undertake a major restructuring at the same time as growing its business significantly, said chief executive Craig Dunn.
Failure to pull that off would mean that the authorities would be unable to ''restore the present competitive position'' if NAB's revised proposal is waved through by the Australian Competition and Consumer Commission in the next week or so.
''The loss of competition in a vitally important market will be permanent,'' Mr Dunn said.
His comments are contained in a confidential internal memo sent to senior AMP executives that has been leaked to BusinessDay.
Its emergence has embarrassed Mr Dunn, who has sought to avoid a clash with the ACCC over the company's opposition to the NAB/AXA deal. This follows commission chairman Graeme Samuel's recent outburst concerning ''unprecedented inappropriate and unacceptable'' rumours that were circulating about the ACCC's talks with NAB.
The contents of Mr Dunn's memo have been used to brief staff about the Sydney-based fund manager's continuing resistance to the takeover of AXA AP by NAB, which trumped AMP's merger offer in December.
Some of the information in the document has been drawn from AMP's latest submission to the ACCC after the regulator blocked the bank's original proposal in April.
Mr Dunn said that the proposed undertakings given by NAB to the ACCC about a revised deal offer the ''hope that IOOF might emerge as a strong competitor'' against the ''certainty'' that the bank's acquisition of AXA will lead to a ''definite and absolute loss of competition''.
As for the integration and growth hurdles facing IOOF over the three-year life of the undertakings, Mr Dunn said that these would be a challenge for any successful company ''let alone a relatively small organisation like [IOOF]''.
''IOOF has a market capitalisation of $1.5 billion compared to NAB's $51 billion and AXA's $11.5 billion,'' he said.
