Turmoil a boon for fund service providers

LUXEMBOURG, March 18 (Reuter) - The market turmoil of recent months has proved good business for fund services companies even if they are stopping well short of toasting investor misery.

The crisis has caused investors to pull out and fund managers to adjust their portfolios, boosting revenues for transaction-driven administration providers, RBC Dexia Investor Services Bank chief Jean-Michel Loehr told the Reuters Funds Summit.

"As long as market activity is taking place, and this is the case today and volatility is actually helping, then we have a sound revenue base," Loehr said in an interview.

Loehr said demand for new products in the face of the crisis was also high.

Thomas Seale, head of rival EFA, Europe's largest independent fund services provider, told Reuters ahead of the summit that there was no discernible slowdown in new projects.

Seale nevertheless talked of his "prudent" stance and Loehr said he was cautiously watching for a potential deepening of the crisis, particularly if the problems of the financial sector spread to the broader economy.

"If the crisis involved a real economic crisis with everything coming to a standstill that would definitely affect the fund administration industry.... by managers not investing, by investors not going in or out of funds," Loehr said.

Loehr also said he believed consolidation in the industry was inevitable and essential with increasing complexity of products and projects, particularly over the last five years, giving bigger players such as his the edge.

Clients expectations had also grown.  Continued...