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NAB Asset Servicing calls it quits

Australia’s last domestically-owned custodian is winding down its operations after an on-off effort to sell the business.

NAB Asset Servicing (NAS) is aiming to wind down its operations over the next two to three years, with personnel ringing around to some clients on Thursday to deliver the news. Sources believe smaller clients will likely be transferred to Apex if they don’t make other arrangements, while its larger clients will have to seek new custody arrangements on their own. It’s understood that there will be no immediate changes to any roles, or for approximately the next 12 months.

NAB confirmed the move, though not specifics around new custody arrangements for clients, saying it was part of an “ongoing strategic portfolio review”.

“The decision to wind down the NAB Asset Servicing business has not been taken lightly,”  NAS CEO John Comito said in a statement. “We recognise the appointment of a new custodian is a very important decision. We are focussed on continuing to meet our clients’ obligations at the high levels we are known for, while supporting a seamless transition to new specialist providers that have global reach and meet our clients’ long-term needs.”

“We anticipate the wind down of the business will take approximately three years and throughout this period we will offer career transition and support to our colleagues who have deep specialist knowledge and have created a true client-centric culture.”

NAS’ potential sale has been written about many times. NAS used to be number one on the ACSA league tables by a long shot; it now sits at fifth (at 30 June). NAS lost several large clients in 2014 when it was announced to the ASX that the bank was putting its business on the market only to take it off the market a year later.

It’s rumoured that State Street offered  more than $1 billion for the business when it made its own acquisition attempt back in 2014. NAB turned it down because State Street wanted to keep the more lucrative cash and FX business, a repeat sticking point in other attempted sales. NAS rebuffed an offer from J.P. Morgan in 2006 in a plan known by J.P. Morgan as “Project Mexico” (south of the border) which would result in NAS running J.P. Morgan’s own domestic custody business and the US bank taking over NAS’ global custody, then run by BNY Mellon, and later taken over by Citi.

HSBC was one of the most recent potential takers, with rumours circulating in March of this year that it was looking to acquire NAS’ 30 largest clients. But that deal had fallen through by June (or before), with NAS at the time deciding to simplify its business by pushing at least 30 of its smaller clients onto other custodians – a simplification effort that now appears to have snowballed into full-scale shut down.

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