Despite being a growing reservoir of funds under management, this critically important pool of capital is confronting mounting problems collating and disseminating key data in a timely manner.
The ratings house is pinning its growth strategy on a revamped methodology that increases the emphasis on governance to 25 per cent – a timely move considering APRA’s proposed reforms.
Custodians wary of indigestion in ‘unique time for activity’
(Pictured: Ian Perkins)
BNP Paribas Securities Services has won its biggest super fund client, the $50 billion UniSuper, in what is a “unique time for activity” for the asset servicing sector. More is to come with a record value of tenders having hit or about to hit the market.
The BNP Paribas deal announced last week followed a review by the fund which was instigated last year after NAB Asset Servicing, the incumbent, had started a review of its own business and a possible sale. NAB subsequently, under new leadership at the bank, committed itself to its custody division but the damage was done.
Ian Perkins, BNP’s head of sales and marketing in Australia and New Zealand, said that his firm had scaled up in preparation for the transition, which would take place by the end of the year. It had “four or five specialists in managing transitions” and would be adding to its six-person team in Melbourne, where UniSuper is based. They would cover relationship management, sales, client servicing and some other specialties.
One of the new sales people, Michael Bland, was recruited last year from NAB where he had been a client services manager for UniSuper for about 10 years, which would not have hurt the BNP cause.
Meanwhile, BNP also has to defend one of its established clients, BUSSQ, which has gone to tender with its asset servicing amongst a slew of reviews by funds and managers.
In such an environment, Perkins said, which was a unique time for activity, custodians needed to pick carefully the clients they wanted to pitch for and make sure they had the capacity to take on new business without interfering with existing services.
While the industry has tended to focus on NAB, which has the largest market share, since last year big tenders in the market place will possibly impact on several other players.
RBC Investor Services, for instance, the smallest of the seven master custody providers (although it only does fund managers in Australia), has its biggest client, the $31 billion Perpetual Trustees, going through a tender along with the $7 billion Northcape Capital.
NAB is defending three more: VFMC, Telstra Super and the Mercer trusts and JP Morgan is defending the Accident Compensation Commission (ACC) in New Zealand against fellow incumbent Northern Trust.
ACC disclosed last week that its review should be finalised in July. This is similar to a decision which is likely to be made by Australia’s QIC, which has also disclosed it wanted to rationalise its asset servicing supplier line-up. QIC has used Northern Trust for middle-office services, some of which are now being insourced again, and NAB for the backoffice.
In the past 12 months, despite the bank’s review of its asset servicing business, NAB has won or retained about $80 billion of business, including big not-for-profit funds CARE, Vision Super and Vic Super, and financial institutions Suncorp, Deutsche and NZ’s Milford. It announced the retention of industry fund AMIST last week.
The Australian Custodial Services Association produced its latest half-year figures for the industry, relating to assets under custody as at December 31, 2014. They showed, in total assets: NAB ($693b, up 2.8 per cent since June 2014); JP Morgan ($478.5b, up 3.2 per cent); BNP Paribas ($325.9b, up 4.5 per cent); Citigroup ($271b, up 5.2 per cent); State Street ($211.8b, down 0.5 per cent); Northern Trust ($198b, up 18.5 per cent); HSBC ($154.1b, up 7.9 per cent); BNY Mellon ($95.2b, down 0.4 per cent); and RBC ($69.5b, up 9.9 per cent).
– Greg Bright
