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.
Mercer’s $25b to shift to Northern’s custody
by Greg Bright
Mercer is about to appoint a new securities servicing partner for its $25 billion under management in investment and super trusts – Northern Trust – following a review. The news, is another blow for incumbent NAB Asset Servicing.
The review commenced last year and by earlier this year it was clear that Mercer was going to make a change. It is understood the shortlist included BNP Paribas, State Street and Northern Trust, which have shared most of the spoils in recent custody tenders.
Mercer confirmed the appointment today (July 13). Simon Eagleton, leader of Mercer’s investments business in the Pacific market, said: “NTC (Northern Trust) was appointed due to the strength of its offer to meet Mercer’s business requirements and growth ambitions in both an institutional and retail investment context NTC’s significant ongoing investment in technology, ability to work with us to improve efficiency, and its enhanced risk management capabilities were all important considerations for us.”
Simon Eagleton, leader of Mercer’s investments business in the Pacific market, said: “NTC (Northern Trust) was appointed due to the strength of its offer to meet Mercer’s business requirements and growth ambitions in both an institutional and retail investment contextNTC’s significant ongoing investment in technology, ability to work with us to improve efficiency, and its enhanced risk management capabilities were all important considerations for us.”
Mercer’s inhouse custody, efficiencies and transitions firm, Mercer Sentinel, assisted in the review process, however, the chief executive of Mercer Sentinel, Peter Baker, stood down from the work because of a perceived conflict. Baker was the chief executive of BNP Paribas Securities Services until he moved to Mercer late last year.
The past 12 months or so has seen an unprecedented level of tender activity in securities servicing, particularly among super funds. NAB, still the largest master custodian in Australia, has lost several on the trot: UniSuper (to BNP Paribas), VFMC (to State Street) and part of QIC (to Northern Trust) in the last two months. It, nevertheless, has retained some as well, such as CARE, and picked up new funds manager business, which tends to fly under the radar.
Two big contracts still to be announced are Telstra Super, which is also with NAB, and the Accident Compensation Commission in New Zealand, which is an interesting one. The NZ$37 billion ACC fund has used two custodians, JP Morgan and Northern Trust, and has decided to have one only in future. This week’s Investment News NZ reports that JP Morgan is the likely winner of that one, although a spokesperson last week said that an appointment had not been finalised. QIC did the same when it rationalised its two service providers down to one.
