Home / Time of the signs: How State Street begs to differ

Profile by Patrick Liddy*

In the early middle ages a pole draped with red flags was the emblem of the barber-surgeon who was permitted to bleed customers on his premises, the pole itself a token of the wooden rod, which the client held to keep his arm steady. The red rag was changed to a red stripe, until it became the customary barber’s pole we see today in all towns and suburbs. Almost every pub, club, sports teams, company, trade, city, county, principality and country has its own sign. Humans like signs and symbols, we always have.

All banks have signs/logos. The four majors – Westpac, was known to insiders as the ‘Three frankfurts’, Nab has the ‘red star’ and interestingly, Glenn Barnes, a genius of marketing, considered dropping the word NAB altogether and just having the star alone, perhaps a little like the “artist formally known as Prince” sort of thing. ANZ’s logo just makes me scratch my head and CBA were simply known as a ‘bunch of cants’ during the last Olympics. (Sometimes marketing has a lot to answer for). Logos have power. Brand recognition is a form of risk reduction in the consumers mind. It is worth getting it right.

State Street’s logo is a clipper ship. This is pertinent as State Street was also known as the “Great Street to the Sea,” and the economic growth of the bank was closely tied to Boston’s flourishing shipping industry. Like the logo, they were sleek and fast. Back in the 1700 and 1800’s, State Street was already developing a reputation ‘for getting there first’. The clipper ship fit and it still does. It is a symbol of expansion, enterprise and speed. They were the first to colonise Australia with master custody. State Street had become recognized as the largest global custodian in Australia in the 1990’s. In 1992, the company was selected as the first non-national custodian of a Swiss pension fund and the first non-Scandinavian custodian bank for a Scandinavian institutional investor. That year, the company opened a treasury centre in Luxembourg, which joined the Boston, London, Hong Kong, and Tokyo facilities in providing 24-hour capital market services around the world, another first. In 2010, State Street completed the acquisition of Mourant International Finance Administration, increasing State Street’s alternative assets under administration, which include private equity and hedge fund assets of $600 billion – to be first in alternative asset administration.

Enter Ian Martin, the head of State Street Global Services, South Asia and Pacific. A pragmatist to his finger tips, he has a measured happy disposition and his talk of State Street in Australia and New Zealand, as well as the rest of the APAC region, is effervescent, but he is ever ready to notice any squalls and opportunities developing in his area. And vigilant he is, as he oversees a rapidly growing business for securities services. He is also head of Global Markets for Australia and New Zealand, multi-asset class trading businesses, electronic trading, securities lending and the full range of investor servicing capabilities, including custody, unit trust, tax, fund accounting, and analytical services. It is an empire the Taipans of old would envy and it is an empire Martin is very determined to expand much further.

On the growth prospects, Martin points out that when his firm started negotiating with REST Super for a new securities servicing contact in 2010, the fund had assets of about $15 billion. Today, it is $25 billion. He points out that another big recently won client, Qsuper, which currently looks after about $40 billion, is expected to oversee $160 billion in 10 years’ time.

The difference, he says, between State Street and the other majors is that “custody is in our DNA”. For State Street, securities servicing is a much bigger proportion of the overall business than it is for the larger BNY Mellon and the, slightly, smaller JP Morgan. “The people who run State Street are custodians – that’s what they’ve done for most of their careers.”

Martin is an old name and takes its origins derived from the ancient Latin given name Martinus, derived from Mars/Martis, the Roman god of fertility and war. State Street’s three wins of Sunsuper, QSuper and Rest have redefined the custody landscape in Australia. The success has been down to exploiting the weaknesses in his competitors and utilising State Street’s strengths as the super funds grow their internal investment management. This has been the key – the funds have ‘caught up’ to what State Street is offering. The investment professionals need the sophisticated tools that State Street offers in order to better manage their portfolios. It is a sweet match, and I’m pretty sure these are marriages that Ian Martin will continue to encourage with his passion. And the way I see it, the other custodians better look back over their shoulders and be prepared to lose some more, because they are just not up to defending against this. They must in some way change the terrain upon which they are fighting or continue to lose. It’s just that simple!

*Patrick Liddy is the principal of consultancy MSI Group. He is also a director of IO&C conferences.