Alain Grisay, Chief Executive, F&C Asset Management: Belgian Spitfire pilot in a very British dogfight

Heard the one about the Belgian, the American, the Portuguese and the South African? They ended up running one of the City's most traditional fund managers.

A few years ago, Foreign & Colonial was the grand old home of establishment fustiness. A lunch at its Georgian offices near Cannon Street might touch on the England cricket team, the teaching of Latin in schools, the lack of honour among business people and, oh yes, investment.

But then it was taken over by a German bank that morphed into a European financial conglomerate. And then it merged with a firm created by putting together Edinburgh investment stalwart Ivory & Sime with the fund management arm of Friends Provident, the former mutual. And now a completely different beast is emerging.

This beast, now named F&C Asset Management, will start to show its true colours on Wednesday. Howard Carter, the rather unfusty Yorkshireman who was the architect of this new £130bn City giant, has retired. In his place is Alain Grisay, a 51-year-old Belgian.

Grisay smiles at the suggestion that he sticks out at such a traditional firm. "We have an American chairman, a Belgian chief executive, our head of investment is Portuguese, our head of retail is South African," he points out. "And yet we are still British."

Having spent most of his working life in either the US or the UK, mostly with American bank JP Morgan, Grisay says he is an Anglophile. He has emphasised that by having an ashtray made out of the top of a piston from a Rolls-Royce Merlin engine - which famously powered the Spitfire fighters in the Second World War. Grisay, who races a 1931 Invicta classic sports car as a hobby, talks wistfully about the time he flew in a Spitfire. "For someone who loves speed and agility, it is a fantastic experience," he says.

Speed and agility are two of the qualities he will need if he is going to make F&C into the fund manager he thinks it could be. While by some measures the merger has worked - this week Grisay will be able to announce the group is achieving the £33m of cost savings it promised at the time of the deal in 2004 - by others it is struggling. The group was hit by the decision of Resolution, a group that manages closed pension funds, to remove £22bn of funds from F&C's care. Although there was a good reason - Resolution had bought Britannic, which had its own fund manager - and F&C received £27m in compensation, it was still a bitter blow.

F&C funds under management may have grown from £118bn at the merger to £131bn by the end of December. But that figure included £20bn which Resolution had yet to take away, and around £25bn placed with F&C by Friends Provident, which owns 51 per cent of F&C's shares. So the fundamental picture doesn't look too healthy.

Grisay realised that he had to act quickly to streamline the company and get it performing. "We are a service industry - we need to show good performance in our funds," he says. "If that happens, it is a virtuous circle." As he argues, good performance brings in clients, which increases profitability, which leads to a higher share price along with higher gains on share options and higher bonuses, which would help F&C attract better people, which should lead to better performance.

To achieve this, Grisay has shaken up the structure of the company. He has taken away six layers of management, removed all manner of investment committees and changed the role of the chief investment officer. This used to be a "guru" post rather than a manager of a team of 180 investor professionals, but Grisay felt this had to change to give more autonomy to the actual fund managers.

As part of his new broom, he published a statement of principles, which he says gives the staff targets to aim for. "The British mentality is one of respect for clear goals and discipline," he argues. "You see that in military history or in sports. If you get the hearts and minds of the staff and point them in the right direction, they will want to succeed and be proud of the company they work for." Grisay claims that, without him saying anything, F&C staff are now coming into the office an hour earlier than they used to.

And where the message isn't getting through, he is willing to change the people themselves. Grisay has brought in a top team of UK equities managers from Deutsche Bank, and made changes in the high-interest bond teams and in emerging markets. Its finance director, Ian Paterson Brown, is leaving, and has yet to be replaced.

The City is warming to him. "Decisive action and the focus on growth are a positive for the longer term," says Bruce Hamilton, an analyst at Morgan Stanley. Like a football manager, however, his changes may look good on paper - but will the new team gel? It will take at least a year before any improvements start showing.

In the meantime, Grisay is talking up the possibility of more deals. He argues that the F&C structure - which has taken Friends Provident's fund management arm out of the group into a stock market listed company - is the model for recent mega deals which have seen US banking giant Citigroup merge its fund manager with Legg Mason and Merrill Lynch tie up with bonds specialist Blackrock.

Grisay believes that the value of many "captured" fund managers is not recognised by the market, and so insurance companies and banks might want to do deals to realise this value.

F&C is in a good position to take advantage of this. It has the back-office structure, the systems and the distribution to support much more than the £111bn of funds it has under management. Taking on another fund manager would mean it could strip out costs, which would flow straight through into profit.

However, the City might want to see F&C delivering on what it has before it backs any more deals. This week's figures are likely to show lower earnings than last year and a possible write-off of goodwill, which is hardly a great start.

There's a long road ahead and Grisay has been so busy sorting out F&C that he hasn't raced his Invicta for months. "I have taken it out a couple of times to turn over the engine - that's all."

In more ways than one, he needs to get motoring.

Biography: Alain Grisay

BORN 1954.

EDUCATION: Master in law, University of Louvain (Belgium); MA in international affairs, John Hopkins University, Washington DC.

CAREER: 1979-2001: various posts with JP Morgan (started as a financial analyst in New York), leading to managing director of the bank's markets business in Europe.

2001: head of institutional business (responsible for continental Europe) - F&C Management.

2001-04: deputy chief executive, member of the board and chairman - F&C Netherlands.

2005: deputy chief executive - F&C Asset Management.

2006: chief executive - F&C Asset Management.

2006: executive director - Friends Provident.