The long-awaited next phase in consolidation in the global custody industry has finally arrived. Deutsche Bank finally acknowledged it was not going to achieve the critical mass and profitability that it needed from the business and sold out to State Street.
Others opted for a much less expensive optionalliances. ABN-AMROs joint venture with Mellon continues to grow. Bank of New York has also chosen the alliance route, teaming up with ING. Deals of this kind, which mean that more front-end providers can be supported by the vast technology base of the biggest players, could become more the norm. But it is too soon to predict what the other two big players who have been keeping their powder dryCitibank and JPMorganwill do.
One regional contender that has made a move is BNP Paribas, which bought fund administration specialists Cogent last year. This is all about being able to offer a better outsourcing serviceproof that suppliers are looking at the range of services they can offer as much as at their geographical reach and volume of assets under custody.
2002: e500 billion
2001: e410 billion
Client Profile: By location: Europe 54%; North America 38%; Asia 6%; others 2%. By investor type: banks 20%; global custodians 14%; broker/dealers 7%; mutual funds 26%; pension funds 4%; centralized depositories 5%; others 6%; retail clients 18%. Foreign 68%; domestic 32%.
Capabilities/Services: Core services include custody and clearing for Italian listed and unlisted securities, in-sourcing and clearing services for remote members accessing the Italian financial markets, as well as correspondent bank services for foreign investment funds and ETFs distributed in Italy.
Business Developments: Recent product developments focus on providing clearing and in-sourcing services to remote traders and local branches of foreign financial institutions acting on the Italian financial markets, offering correspondent bank (paying agency) and in-sourcing services to foreign investment funds distributed in Italy and offering in-sourcing for Internet brokers accessing the Italian financial markets.
Outlook: Increased interest in accessing the Italian financial markets on a remote trading basis and in exploiting the Internet for trading and registering foreign investment funds for distribution in Italy. Keen interest also on in-sourcing services for local intermediaries and local asset management companies.
Contact: Elisabetta Pellichero
Tel: +39 02 8794 2466
Fax: +39 02 8794 1519
2002: $42 billion
2001: $60 billion
Capabilities/Services: Back- office services for brokerage houses, pension fund retirement services. Custody, securities settlement, safekeeping, corporate action control, NAV calculation and legal accounting. Shareholders control for mutual funds, offshore funds, portfolios, receivable funds, real estate funds and pension funds.
Business Developments: Focus on high growth areas such as custody for receivable funds, back office services for brokerage houses and pension fund retirement plan services. Starting to provide a full range of defined contribution and defined benefit plan services.
Top Emerging Market: Brazil.
Outlook: Enhance and develop new products and services offerings for asset management companies, banks, corporations and pension funds. Consolidating the services provided for brokerage houses, receivable funds and retirement plan services for pension fund companies.
Contact: Luiz Eduardo Zago, Lauro Leite Silva
Tel: +55 11 3247 5518
Fax: +55 11 3247 5260
Bank of New York
2002: $6.8 trillion
2001: $6.9 trillion
Ratings: Moodys Aa3; S&P;A+; Fitch IBCA AA-.
Client Profile: By location: Americas 68%; Europe 26%; Asia/Australia 4%; Middle East/Africa 2%. By investor type: mutual funds/fund managers 28.5%; banks, trust companies, central banks 18%; government agencies 15%; insurance companies 16.5%; corporate and pension funds 14%; broker/ dealers 5%; other 3%.
Capabilities/Services: Services include US and global custody, foreign exchange, investment/ fund accounting, fund administration, securities lending, transfer agency, performance measurement and analytics, investment compliance monitoring, performance consulting, institutional asset management, global portfolio transition and brokerage commission recapture.
Business Developments: BNY and ING joined forces to enhance the delivery of global custody and related services, such as compliance monitoring, investment accounting, performance measurement and analytics to institutional clients in Germany, Benelux, Central and Eastern Europe.
Outlook: The bank aims to be the premier provider of correspondent clearing services.
Contact: Fred Ricciardi
Tel: 212 635 1972
Fax: 212 635 6814
2002: $800 billion
2001: $800 billion
Ratings: Fitch IBCA A/B (an A+ implied long-term debt rating).
Client Profile: By location: Americas 43%; Europe 50%; Asia 7%. By investor type: investment managers 56%; banks 33.5%; insurance 6.5%; other 4%.
Capabilities/Services: Investor services, brokerage, foreign exchange, investment management, commercial banking,corporate finance.
Business Developments: BBH launched a Web-based inquiry management system to help clients become more self-sufficient in their ability to access and manage their account information. It is also expanding its Internet-based corporate actions notification and response system. This project minimizes the risks associated with the manual nature of corporate actions processing within the industry.
Outlook: BBH hopes to help clients with cost containment, revenue generation and operational efficiency by addressing their pain points.
Contact: James Kent
Tel: 617 772 1040
Fax: 617 772 2263
2002: e1.8 trillion
2001: e2.0 trillion
Ratings: Moodys Aa2; S&P;AA-; Fitch IBCA AA.
Capabilities/Services: Services include fund administration and fund accounting; transfer agency; depository bank; corporate trust, cash and securities financing; collateral management; tri-party repo; performance measurement and attribution reporting; securities lending and borrowing; issuer services; middle- and back- office in-sourcing; master custody (Australia); local custody (in 10 markets); and global custody.
Business Developments: Launch of domestic clearing and custody in the UK, set up of liquidity management desk in Luxembourg, acquisition of Cogent in September 2002.
Top Emerging Markets:Lebanon, Malta, Estonia and Slovakia.
Outlook: BNPParibas aims to maximize the cross-selling synergies resulting from the Cogent acquisition, to continue investment in investor services and to reinforce its custody presence in the eurozone.
Contact: Beth Dowling
Tel: +44 207 595 3967
Fax: +44 207 595 5078
2002: e450 billion
2001: e400 billion
Ratings: Moodys Aa1; S&P;AA; Fitch IBCA AA+.
Capabilities/Services: Services include custody/trustee, corporate trust, fund administration and transfer agency activities at a European level. Crdit Agricole Investor Services also provides sub-custodian services, real-time reporting, trade settlement, income collection, proxy voting, tax reclaim and legal engineering.
Business Developments: Developing STP capabilities and Internet communication tools. Efforts are also focused on the implementation of the ISIN code (effective from the end of June 2003), which will increase the exchange of messages between institutions and at the same time reduce fail rates.
Outlook: Market consolidation is presenting a challenge for European players, as is the emergence of cross-border and multi- manager products.
Contact: Patrick Lemuet
Tel: +33 1 43 23 89 75
Fax: +33 1 43 23 89 07
2002: $5.1 trillion
2001: $4.8 trillion
Ratings: Moodys Aa1; S&P;AA; Fitch IBCA AA+.
Client Profile: By location: Diverse client base across North America, Europe, Asia, Japan, Latin America, Middle East and Africa. By investor type: Mutual funds, pension funds, insurance companies, corporates, banks and other financial institutions. Foreign 60%; domestic 40%.
Capabilities/Services: Include integrated securities services, cash management and trade finance, custody and settlement services, fund administration, outsourcing and advisory services, securities financing, cash management, performance management, and reporting.
Business Developments: Combined all transaction services into one organization to provide improved access to integrated offerings.
Outlook: Focus on integrated service offerings, client servicing initiatives, product and service
Tel:212 657 1234
2002: e450 billion
2001: e410 billion
Ratings: Moodys Aa3; S&P;AA-; Fitch IBCA AA-.
Client Profile: By location: Europe 80%; other 20%. By investor type:pension funds 60%: banks 30%: other 10%. Foreign 35%;domestic 65%
Capabilities/Services: Services include safekeeping, settlement, corporate actions, tax reclaim and proxy voting services, performance measurement, compliance monitoring, securities borrowing and lending activities of domestic and international securities.
Business Developments: Enhancements in the processing environment, especially concerning corporate actions and tax reclaims. Providing improved investment analytics, including performance calculations and benchmark comparisons.
Top Emerging Markets:Austria, Slovakia, Hungary, Czech Republic, Estonia, Russia, Argentina, Brazil, Mexico, Greece, India, Israel, Morocco, Indonesia, South Korea, Taiwan, Phil-ippines, Egypt and China.
Outlook: Focus will be on value-added services, flexibility, automation and expanding securities clearing services beyond the Euronext markets.
Contact: Clayton Heijman
Tel: +31 20 527 1127
Fax: +31 20 527 4994
2002: $1.2 trillion
2001: $1.1 trillion
Ratings: Moodys Aa2; S&P;AA-; Fitch IBCA AA.
Client Profile: By location: UK81%; Europe 9%; Pacific Basin 4%; North America 1%; South America 1%; Africa 1%; Middle East 1%; other 2%. By investor type: banks 33%;fund managers 26%; insurance companies 11%; other 19%. Capabilities/Services: Custody, cash management, corporate governance, issuer services, sub custody, investment administration, performance consultancy, management information products, consultancy services.
Business Developments: Continued product and systems developments. Focus on Europe. Closer alignment of global custody and investment administration capabilities.
Top Emerging Markets:Greece, India, Malaysia, Korea, South Africa, Taiwan and Thailand.
Outlook: Challenging business conditions. Strong commitment to investor services business.
Contact: Allen Harris
Tel: +44 207 260 5771
Fax: +44 207 260 8959
2002: $785 billion
2001: $814 billion
Fitch IBCA A.
Client Profile: By location: United States 83%; Europe 17%. Foreign 14%; domestic 86%.
Capabilities/Services: Includeglobal and domestic custody, multi-currency fund accounting, fund administration, transfer agency, trade operations management, outsourcing, investment adviser custody services, trustee services, master trust accounting, securities lending, foreign exchange, cash management, transition management and benefit payment services.
Top Emerging Markets:Korea, Taiwan, Mexico, Greece, South Africa and the Philippines. Considering adding Tunisia, Serbia and Montenegro.
Outlook: Continued focus on excellence in client service, increasing Internet offerings and developing middle- and back-office outsourcing.
Contact: Rob Mancuso, senior vice president
Tel: 617 937 6226
Fax: 617 937 6033
2002: $6.3 trillion
2001: $6.5 trillion
Ratings: JPMorgan Chase long-term debt ratings:Moodys Aa3; S&P;AA-; Fitch IBCA AA-.
Client Profile: By location: North America 75%; Europe 19%; Asia-Pacific 3.6%. By investor type: insurance 20%; mutual funds 17%; banks 14%; broker/dealers 14%; corporate pension 10%.
Capabilities/Services: Services includeglobal and domestic custody, multicurrency accounting, performance measurement, analytics and consulting services, information products, securities lending, cash and short-term investment products and global consolidated reporting.
Business Developments: Developing Alpha Capture Series that provides a total cost-management solution for investorment managers that covers research, trade execution and settlement performance.
Top Emerging Markets:Added Malta in 2002. Watching developments in India, Taiwan, China, Russia, Brazil and Turkey.
Outlook: Increasingly, asset managers will focus on creating and distributing products designed specifically for the European and Asian markets.We will see tremendous growth in Europe over the next 10 years and in Asia over the next 30 years. Under-performing funds in the USwill see net outflows and will have to cut costs to compensate.
Contact: Christopher Lynch, senior vice president
Tel: 718 242 7555
Fax: 718 242 6700
2002: $2.9 trillion
2001: $2.6 trillion
Ratings: Mellon Financial Corporation:Moodys Aa3; S&P;AA-; Fitch IBCA AA.
Capabilities/Services: Mellon Group (including Mellon Global Securities Services, CIBC Mellon and ABN AMRO Mellon) services include custody, trust, global securities settlement, entitlement, corporate action processing, multi-currency accounting and reporting, benefit disbursement services, ERISA reporting, Schedule D reporting and regulatory reporting.
Business Developments: Expansion in outsourcing client base; introduction of electronic notification and response for corporate actions; growth in performance measurement product.
Top Emerging Markets:Added in the past two years: Bahrain, Iceland, Kazahkstan, Lebanon, Oman, Ukraine and Uganda.
Outlook: Focus on product development and value-added services.
Contact: Mellon Financial Corporation:James J. Flannery
Tel:800 597 1459
CIBC Mellon:David Linds
Tel:416 643 5300
Fax:416 643 6360
ABN AMRO Mellon Global Securities Services: Keith Hallman
Tel:+44 207 623 0800
Fax:+44 207 929 4408
2002: $1.5 trillion
2001: $1.7 trillion
Ratings: Moodys Aa3; S&P;AA-; Fitch IBCA AA.
Client Profile: By location: Clients are domiciled in 38 countries. By investor type: pensions 42%; government/central banks 32%; foundations/endowments 9%; funds 9%; insurance 8%.
Capabilities/Services: Include safekeeping and settlement in 97 countries, income collection, contractual settlement and income policies, tax reclamation, cash management, corporate actions, proxy voting, foreign exchange, securities lending, commission recapture, consolidated on-line/Internet reporting, portfolio restructuring.
Business Developments: Enhancements to Internet capabilities, expansion of local servicing, continuing initiatives for information delivery, straight-through processing, risk management, performance measurement analytics and component outsourcing solutions.
Top Emerging Markets:South Korea, Taiwan, South Africa, Mexico, Thailand, Malaysia, Indonesia and Brazil.
Outlook: Continued interest in component outsourcing of non-core activities by fund managers; further emphasis on operational improvement including straight-through processing and working toward reduction in settlement cycles.
Contact: Penelope Biggs, head of international sales and global fund services
Tel: +44 207 982 2200
Fax: +44 207 982 3623
2002: $336 billion
2001: $357 billion
Ratings: PNC Financial Services Group senior debt: Moodys A2; S&P;A-; Fitch IBCA A.
Client Profile: By location: Americas 95%; Europe and Asia 5%. By investor type: mutual funds 95%; international funds 2%; UIT 1%; insurance companies 2%.
Capabilities/Services: Custody services include global and domestic custody, international securities lending, 24-hour foreign-exchange trading, cash management, treasury management services, international fund servicing.
Top Emerging Markets:Brazil, India, South Korea, Mexico and Taiwan.
Outlook: PFPC is expanding middle- and back-office outsourcing, with an ongoing focus on straight-through processing.
Contact: Fred W. Jacobs, senior vice president
Tel: 302 791 2000
2002: $120 billion
2001: $107 billion
Ratings: Pictet does not issue debt.
Client Profile: By location: mostly European. By investor type: international and private assets.
equity administration; strategic consulting; tailored accounting services; multi-factor risk and performance measurement and attribution; Internet access/communication (CustodyLink); trade execution; asset management.
Business Developments: Launch of CustodyLink in 2002. Multi-factor risk analysis.
Top Emerging Markets:Offers access to 85 markets worldwide including virtually every emerging market.
Outlook: Continue to enhance Web-based communication system.
Contact: Richard Humes
Tel: +41 58 323 2499
Fax: +41 58 323 2052
RBC Global Services
2002: $939 billion
2001: $895 billion
Ratings: Moodys Aa2; S&P; AA-; Fitch IBCA AA.
Client Profile: By location: North America 78%; Europe 10%; other 12%. By investor type: money managers 44%; pension 27%; financial institutions 16%; insurance 13%. Foreign 54%; domestic 46%.
Capabilities/Services: Services include global custody; fund administration services for funds domiciled in Canada, Australia, Cayman Islands and Channel Islands; global securities lending and finance; tri-party repurchase; treasury and foreign exchange services; cash management; pre-trade currency-flow analysis.
Business Developments: Launched Web-based securities lending automation initiative; was appointed tri-party repurchase agent for the government of Canada; announced strategic alliance with RiskMetrics Group; introduced Benchmark Commission Recapture program; received best outsourcing award from GSCS Benchmarks.
Top Emerging Markets:Korea, South Africa, Taiwan, Mexico, Malaysia.
Outlook: Continued focus on enhancing clients competitiveness.
Contact: Robert T. Wright, vice president, sales & relationship management
Tel: +44 207 653 4522
Fax: +44 207 248 3946
2002: $6.2 trillion
2001: $6.2 trillion
Ratings: Moodys Aa3; S&P; AA-; Fitch IBCA AA.
Client Profile: By location: North America 79%; Europe 13%; Asia-Pacific 8%. By investor type: mutual funds or investment/asset manager 53%; pension/endowments and foundations 32%; insurance 7%; other 8%. Foreign 21%; domestic 79%.
Capabilities/Services: Services include multi-currency fund accounting and administration; daily pricing; brokerage; treasury and foreign exchange; cash management; securities lending; performance measurement and analytics; outsourcing; investment management.
Business Developments: Completed the purchase of Deutsche Banks Global Securities Services business on January 31 this year. In July 2002 acquired International Funds Services, a provider of fund accounting and administration as well as trade support and middle-office services for alternative investment portfolios.
Top Emerging Markets:South Korea, Taiwan, India, Portugal, Brazil. Cayman Islands and Uganda were added during the year.
Outlook: The bank is investing in new outsourcing technology and plans to broaden its range of risk-controlled products, especially in Europe.
Contact: Drew Pace, senior vice president
Tel: 617 985 7506
Fax: 617 985 2733
Swiss American Securitites
2002: $60 billion
2001: $70 billion
Ratings: Parent company, Credit Suisse Group: Moody’s Aa3; S&P; AA-; Fitch IBCA AA-.
Client Profile: By location: 90% Europe; 5% Asia; 5%. By investor type: 80% foreign banks; 10% broker/dealers; 10% other. Foreign: 95%; domestic: 2.5%; other: 2.5%.
Capabilities/Services: A member of Credit Suisse Group, SASI caters to small and mid-sized global financial institutions such as private banks, universal banks, broker dealers and other financial institutions. Products and services include: international brokerage; and execution in equities, fixed income, options and futures.
Business Developments: Include streamlining messaging and messaging translation to support maximum rates of STP; exploring the possibility of a peer-to-peer network; and improving custodial network to expand to additional markets.
Outlook: Focus will be on growing the product line in international mutual fund, futures and options as well as REPO and fixed income initiatives. SASI will continue to focus on STP driven solutions.
Contact: Nadine Nassar
Tel: 212 612 8731
Fax: 212 612 8885
Union Bank of California
2002: $140 billion
2001: $140 billion
Ratings: Moodys A1; S&P; A-; Fitch IBCA A.
Client Profile: By location: Americas 76%; Asia-Pacific 19%; Europe/Middle East/Africa 3%. By investor type: banks 53%; investment managers 25%; mutual funds 21%; other 1%. Foreign 3%; domestic 97%.
Capabilities/Services: Include fully integrated securities processing and controls for US and foreign markets, with a single point of contact for processing and inquiry needs; flexible information delivery including direct access and electronic delivery from real-time integrated processing and accounting system, supporting US and global processing on a single platform.
Top Emerging Markets: Korea, Mexico, South Africa, Taiwan.
Business Developments: Focus remained on developing partnerships in the regional bank marketplace and in the investment in and expansion of services to the mutual funds industry.
Outlook: Continued commitment to securities processing, securities custody and securities lending.
Contact: Kevin Galvin
Tel: 415 291 7675
Fax: 415 291 7405
2002: $802 billion
2001: $739 billion
Ratings: Moodys Aa3; S&P; A+; Fitch IBCA A.
Client Profile: By location: North America 29%; South America 61%; Europe 8%; Asia 2%. By investor type: corporate 30%; mutual funds 19%; government 15%; insurance 11%; healthcare 7%; endowments/foundations 5%; other 13%. Foreign 3%; domestic 97%.
Capabilities/Services: Domestic and global custody services, safekeeping of securities, trade settlement, income processing, maturities processing, automated cash management, corporate action notification, foreign exchange, proxies, offshore operations, securities lending, performance measurement, investment management, cash and treasury management, commission recapture.
Top Emerging Markets: Asia and Europe.
Business Developments: Continuing efforts to provide straight-through processing to all customers; development of multi-currency and multi-lingual statements; ongoing focus on growing securities lending products and services; enhanced Internet capabilities with real time access to vital information; enhanced reporting features.
Contact: Donald Mahoney
Tel: 215 670 7800
Fax: 215 670 7850