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T. Rowe to Base EU Operations in Luxembourg Post Brexit

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T. Rowe Price Group (TROW - Free Report) is taking steps to base its European operations in Luxembourg post Brexit, per a Financial Times article.

The investment companies are putting their plans into action after the European Commission warned the U.K.-based fund companies that they could be banned from selling products in the European Union (EU) from April 2019.

Recently, the company applied to the Luxembourg’s financial regulator to separate its U.K. and Luxembourg operations.

The decision to move operations from London to Luxembourg was taken in 2017 and Robert Higginbotham, head of global investment services at T.Rowe Price, expects the new unit to be ready by summer this year.

The asset manager already has European operations in Madrid, Milan, Zurich, Frankfurt, Amsterdam, Copenhagen and Stockholm. Higginbotham expects EU offices to be able to report to the Luxembourg entity by the end of 2018.

The shifting of operations would not affect jobs in the United Kingdom, while new positions would be available in Luxembourg.

Financial Times quoted Higginbotham, “All this is based on what we know about Brexit at the moment — which will probably be about 25 per cent of what we know in a year’s time. We have been working on this for a year and will have to get it complete by the end of the year.”  

T.Rowe Price is not the only asset manager that is weighing up its Brexit contingency plans. Per an EY survey that involved about 55 asset and wealth managers, overseeing a combined investment of €25 trillion, half are working on or planning to expand their European operations in an attempt to protect themselves from the impacts of Brexit.

T.Rowe Price’s organic growth remains impressive as can be seen from a continuous rise in revenues. Also, its strategic initiatives, including investment in technology and advisory services, bode well for the long term.

Shares of T.Rowe Price have gained 55.2% over the past year, outperforming 20.2% rally for the industry it belongs to.

The stock carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Some other stocks worth considering in the same space are BlackRock (BLK - Free Report) , Lazard Ltd (LAZ - Free Report) and Affiliated Managers Group (AMG - Free Report) . All these stocks carry a Zacks Rank of 2.

The Zacks Consensus Estimate for BlackRock has increased 12.1% for the current year, in the last 60 days. The company’s share price has increased 38.7% in the past year.

Lazard has witnessed 3.1% upward earnings estimate revision for 2018, in the last 30 days. Its share price has risen 27.8% in the past year.

Affiliated Managers’ shares have gained 12.2% in a year and its earnings estimates for 2018 have moved up 2% in the last 30 days.

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