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Jun 30, 1997

Spotlight on Brussels

The uncertain nature of the European capital

Brussels is a city of contradictions. You ask people what it's like to live there and they'll tell you it's a parochial village compared to London or Paris. And yet it's widely regarded as the capital of Europe.

The wealth of the place is obvious. The streets are jammed with BMWs and Saab Turbos, the pavements lined with expensive restaurants and bars. Yet in a poll of people in 47 countries last year, Belgians were found to be the most pessimistic about their future prospects. And with national debt at 130 percent of GNP they might be right.

Those contradictions also cross over into the financial community, which is nestled discreetly among the Versace and Gucci designer shops in three streets above the slightly gaudy Grand Place. Ask anyone whether Brussels is worth visiting and they'll tell you, yes, but only as a stop-off on the way to somewhere more important - like Amsterdam. This despite the fact that the city ranks ninth in Europe in terms of institutional investment in non-domestic equities, above the likes of Milan, Dusseldorf, Munich and, yes, Amsterdam.

It might just be an example of Belgian understatement. Investors in Brussels don't seem to feel the need to show off. 'We're not trying to swing for the fences or hit the home runs. We're looking for good steady returns,' explains American-born John Dreyer who heads up international equity investment at Generale de Banque, Belgium's oldest bank which, alongside Banque Bruxelles Lambert and Kredietbank, controls the vast majority of all the funds in Belgium.

'We don't want too much volatility nor do we want to take undue risk. We're just tilting slightly our benchmarks. If it turns out well, that's great. If not, it won't kill us,' he adds.

Dreyer's attitude typifies Belgian investors' conservativism, something they're not ashamed of. 'It just makes good economic sense to stick with the blue chips,' says Leo Hendrix, who runs the international equity investment arm of Kredietbank, Generale de Banque's Flemish rival. 'Eighty percent of Nasdaq was in a loss situation last year and so things would have been disastrous if we'd invested heavily in them. Plus you've got to take into consideration how labor-intensive it is to keep track of 17,000 stocks. It seems much more sensible to concentrate on the likes of Intel and Microsoft which you know are going to perform well,' Hendrix adds.

Belgian Dentists

According to Jean-Nicolas Caprasse, partner of shareholder advisory firm Deminor, secrecy, as well as conservatism, characterize the Belgian investor's mentality. 'People are very reluctant to talk about what they do with their money or for other people to know what their assets are. Bearer shares, which you can hold physically, are really popular in Belgium unlike in other countries where they're generally not available,' he says. And for the same reason, a lot of people choose to invest directly themselves rather than through funds.

Private individuals seem to have a lot of money to spare. Belgium has the highest savings rate in Europe, and ranks second in the world after Japan. It's that old cliched image of the Belgian dentist; the epitome of the wealthy European professional, usually self-employed, who's got lots of cash to stash away. And most of it seems to be stashed in Luxembourg.

'If you go to a bank in Luxembourg you'll find it packed with people who've taken the autoroute du soleil from Brussels to come to get their dividends,' says one investor relations consultant.

Just how much Belgian money there is in Luxembourg is unclear - as is the nature of the relationship between investment communities in the two countries. All three of the big Belgian banks have large subsidiaries in Luxembourg and although everyone will tell you that the funds are managed separately, investment strategy in Brussels is usually replicated there.

So is it worth making the extra trip? 'We've started going more than we used to because there is a growing group of portfolio managers there,' says Adrian Rusling of Kuhn Partners, a leading Brussels-based investor relations agency. 'However, many Luxembourg funds are offshore funds and so clearly are being managed from other financial centers. The key point is to be able to distinguish between the two.'

Another relationship about which people are a little cagey is that between the Walloon and Flemish financial communities in Brussels itself. 'There are no real differences between the two. Money is just money,' says Generale de Banque's John Dreyer, who as an American living in Brussels is probably more anxious than most to avoid treading on anyone's cultural sensibilities. 'All the large banks have French and Flemish speakers and their investment patterns aren't very different. In terms of European investment, we probably have slightly more of a leaning towards France and Kredietbank towards the Netherlands but it's minimal,' Dreyer adds. However, the repeated talk about mergers among Belgian banks, particularly between ING and BBL, suggests the link between the nationalities may be stronger.

Balanced Approach

The conservatism of the investment community in Brussels results from its size as well as the national character. When there are only a couple of people manning an international equity department, rather than the hoards of fund managers you'd find in New York or London, you can't expect the same depth of analysis.

'I've got such a broad brief - controlling mutual funds and unit trusts throughout the US, UK and continental Europe - that I just don't have the time to do anything other than play it safe and take a more careful, balanced approach, steering clear of the really risky sectors like technology,' explains Dreyer.

This breadth of focus and consequent lack of detailed knowledge of specific companies means that investors have less time to spend with companies. 'I'm not one for going in and kicking the tyres and shaking hands - I just don't have the time,' Dreyer says. Which means he'd rather meet with companies at a larger meeting than a one-on-one. 'I don't want to waste their time either,' Dreyer says.

It appears Dreyer is not alone. 'Whereas in London if companies don't go to visit the top institutions privately, they will sometimes refuse to see you, or if you arrange a lunch, they might not show up, in Brussels that sort of treatment just isn't expected from investors. People have not had the luxury of companies with the time or inclination to see them separately,' says Kuhn Partners' Patrick de Ronchane.

And the wide choice of really excellent restaurants available in Brussels means that, as in Paris, the majority of meetings are carried out with food. 'Belgians like to eat,' Ronchane observes wrily.

Some of the places regularly frequented include Comme Chez Soi, which is universally recognized as the best restaurant in Brussels; La Maison du Cygne, located conveniently on the Grand Place; and La Quincaillerie, in the Ixelles area of the city.

Kuhn Partners chooses not to entertain at any of the city's restaurants but at its own private club. 'It's old-fashioned and secluded and the banks seem to like it,' de Ronchane comments.

Rusling and de Ronchane, who organize about 70 roadshow tours throughout the UK and continental Europe each year, with 20 or so stop-offs in Brussels, recommend dinner as one of the most convenient times to meet up with Belgium investors.

'You've got to do the Netherlands by car because the investors there are so spread out so its quite convenient to spend the evening before in Brussels with the three key banks and then to pick up a car the next morning,' Rusling explains. 'You might lose a few people who work outside Brussels - Kredietbank investors particularly - but generally you'll get good attendance levels.'

Dreyer agrees. 'Unlike Paris or London where a lot of people commute from outside the City, most people live in, or near, the center of Brussels so they can go home and then come out again in the evening to meet up with companies.'

According to Kuhn Partners, investors in Brussels are also less demanding than other Europeans in terms of the people they expect to see.

'Whereas fund managers in Frankfurt often won't bother going to a presentation given by anyone other than the CEO or CFO, most investors in Brussels will be satisfied with a well-informed IRO,' Rusling says.

'Of course, it's more interesting to get the authoritative response from top management rather than the official line from an IRO but it certainly wouldn't put me off attending - they are usually extremely well-informed,' comments Kredietbank's Leo Hendrix.

So despite the financial community's modesty, with $63.3bn worth of equity under management, Brussels is certainly worth a visit. Investors and IR people alike recommend you 'fit in' a dinner with a few key fund managers on the way to another financial center.

But although less demanding and more accommodating than some other Europeans, the investors in Brussels will take a lot of persuading to put their money in anything that hasn't already been proved to be a solid investment.

Tourist Information
Where to present
Espace Moselle
40 rue des Drapiers
Bruxelles 1050
Tel: +32 2 502 65 45
Fax: +32 2 502 66 28

Management Centre Europe
118 rue de l'Aqueduc
Bruxelles 1050
Tel: +32 2 543 21 00
Fax: +32 2 543 24 00

Palais des Congrs de Bruxelles
3 Coudenberg
Bruxelles 1000
Tel: +32 2 513 41 30
Fax: +32 2 514 21 12

Where to stay

1-3 rue de l'Amigo
Bruxelles 1000
Tel: +32 2 547 47 47
Fax: +32 2 513 52 77

Conrad Brussels
72 avenue Louise
Bruxelles 1050
Tel: +32 2 542 42 42
Fax: +32 2 542 42 00

Hilton Brussels
38 boulevard de Waterloo
Bruxelles 1000
Tel: +32 2 504 11 11
Fax: +32 2 504 21 11

Le Meridien
3 carrefour de l'Europe
Bruxelles 1000
Tel: +32 2 548 42 11
Fax: +32 2 548 40 80

Radisson SAS Hotel
47 rue Fosse-aux-Loups
Bruxelles 1000
Tel: +32 2 219 28 28
Fax: +32 2 219 62 62

Where to eat

Comme Chez Soi
23 place Rouppe
Bruxelles 1000
Tel: +32 2 512 29 21

La Maison du Cygne
9 Grand Place
Bruxelles 1000
Tel: +32 2 511 82 44

La Quincaillerie
45 rue du Page
Bruxelles 1050
Tel: +32 2 538 25 53

La Belle Marchere
11 place Ste CathŽrine
Bruxelles 1000

Tel: +32 2 512 97 59

Where to go

Le Cinquantenaire
Parc du Cinquantenaire
Bruxelles 1000
Inspired by the Arc de Triomphe in Paris

Boulevard du Centenaire
Bruxelles 1020
Tel: +32 2 477 09 04
Brussels' equivalent of the Eiffel Tower

Grand Place/Grote Market
The crossroads of Brussels

Muse d'Art Moderne
1-2 place Royale
Bruxelles 1000
Tel: +32 2 508 32 11

Top 10 Fund Management Institutions
(In alphabetical order)

  • AG 1824
  • AGF/Assubel
  • Banque Bruxelles Lambert (BBL)
  • Banque Paribas Belgique
  • Compagnie Benelux Paribas (COBEPA)
  • Credit Communal de Belgique
  • Fortis Investments Belgium
  • Generale de Banque
  • Kredietbank
  • Royale Belge Investment Management

Source: Technimetrics Inc