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.
Khoury takes on new hot seat at State Street
Paul Khoury
Paul Khoury, the new head of State Street Global Services for Australia and New Zealand, believes that the custodians which have invested in their systems, operating model and people over the past few years, when margins have been tighter than ever, will be the winners from the current pipeline of contract reviews.
Khoury, who has been at State Street since 2001, was most recently head of asset manager sector sales for Asia Pacific. Prior to that he was head of Global Services operations for Australia. In the new role he oversees operations, sales and client relationship management, reporting to Chris Taylor, who remains as head of both the Global Services business and Global Markets in Australia and New Zealand. Strengthening the operations area at the same time, Stephanie Lanigan has been appointed chief administrative officer, reporting to APAC region operations head Michael Brager.
Khoury said that it was possible that “one or two” custodians could exit the market in Australia because of the tough competition. “But the spoils will be shared by a number of custodians for a host of reasons,” he said, “including capacity”.
Two big funds announced new custodians in the past two months – UniSuper to BNP Paribas and VFMC to State Street. QIC also rationalised its two service providers – NAB and Northern Trust – down to one (Northern). The next one likely to be announced is the Mercer investment trusts, which are also currently with NAB and total about $25 billion.
Khoury said discussions with super funds and fund manager clients had evolved beyond traditional custody and accounting to include a lot more focus on data and analytics. He believed that this was contributing to the number of reviews in the past few months and which are upcoming.
“With a number of large super funds coming to the market, we are being selective with what we bid on,” he said. “We like the sophisticated and complex funds where we can customise our services to meet their unique needs… We compete on product capabilities and strategies, not solely on fees. We also look for an alignment with corporate values and look to be long-term sustainable in a low-fee environment.”
