The $300 billion profit-to-member fund has linked up with Oxford Properties for a portfolio of high-quality European industrial and logistics assets that it wants to expand significantly over the next three to five years.
Australia’s megafunds are looking to international asset owners for ideas on how to invest what will soon be trillions in retirement savings. But banks – with their sharp focus on efficient implementation and balance sheet management – could also be a source of inspiration.
J.P. Morgan cleans out the cupboard for sub-custody
J.P. Morgan, Australia’s largest securities services firm, has told several of its direct sub-custody clients that they need to look elsewhere for another provider. The biggest of these, Clearstream, is already going to tender. This doesn’t happen too often, but it happens, and reflects the intricate nature of the asset servicing business.
J.P. Morgan Securities Services has told its Australian and New Zealand- based sub-custody-only clients that they should look for another provider. J.P. Morgan is the custodian for Australia’s largest super fund, AustralianSuper, as well as NZ’s largest fiduciary fund, the ACC (the Accident Compensation Corporation).
A J.P. Morgan spokesperson said she was unable to reveal how many clients were affected by the decision. “It’s not many, though” she said. The word around the traps is that they are mainly former clients of ANZ Bank’s securities services business, purchased by J.P. Morgan in 2010.
Securities servicing is a low-margin business. Custodians look to get extra revenue from added services, such as master custody, global custody, securities lending and cash and FX management. ‘Sub-custody’, sometimes known as ‘domestic custody’ is the lowest margin part of the range of services they offer.
Clearstream is going to tender for its sub-custody business covering between A$50-60 billion. Clearstream, which is owned by Deutsche Borse, bought Ausmaq, a post-trade services provider, from National Australia Bank mid-way through last year. The PR spokesperson for Clearstream, in Frankfurt, said: “We are evaluating the situation to find the best solution together with our customers. Please understand that we won’t comment further on the situation.” Thanks for that.
J.P. Morgan has not sold the business or nominated a preferred alternative provider. The bank says it remains committed to supporting global custody clients and affiliates in Australia and New Zealand and will continue to act as the sub-custodian entity in the Australian market, and its New Zealand Branch will continue to act as the sub-custodian entity in New Zealand.
It is leaving it up to the clients to make their own decisions about an alternative provider and has offered to work with the clients to ensure a smooth transition. Global custody will become the primary driver for J.P.’s security services clients in Australia and NZ.
– G.B.
