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Headline: JPMorgan Source: Euromoney Date: July 2001 Author: Julian Marshal The world’s best at custody
With nearly $6 trillion of assets under custody, of which $2.3 trillion are global custody assets, JPMorgan Investor Services continues to lead the market against its biggest competitors, the Bank of New York and State Street. What will please senior executives is the way it has kept the business running smoothly through the merger. Though there were few transition issues to deal with, as the old JPMorgan had no custody business, the operation continues to win praise from its clients, a high proportion of which are large institutional investors that demand increasingly sophisticated services. Euromoney’s sister magazine, Global Investor, which conducts the custody industry’s leading poll, once again ranked the custody operation number one overall for client satisfaction, best in Europe, and best global custodian as voted by insurance companies. Ramy Bourgi, business executive for JPMorgan Investor Services in Europe, says this comes down to a focus on relationship management, together with a comprehensive product range which has been expanded thanks to the addition of transition management through JPMorgan’s equity capability. Now Bourgi says the operation is turning its efforts to providing pan-European fund servicing. “We are broadening products within investor services to capture the flow of funds in Europe,” he says. To this end JPMorgan, which offers fund servicing in the UK, has established a local presence in Germany and recently added France to the list. Bourgi says it is close to finalizing arrangements in Italy and is now looking at developing in Spain. This shift in focus away from the more traditional custody business has also led JPMorgan to develop its outsourcing operation. This has been given the significant boost of securing a deal with Schroder Investment Management in London and BT Funds Management in Australia. JPMorgan is providing outsourcing and fund administration to Schroder for $170 billion of client assets and custody services for its $85 billion of assets held in-house. “Fund managers want to outsource and we have invested heavily in that area of the business,” says Bourgi. “Fund managers want to concentrate on their core business: having good performance and the ability to distribute the fund. They do not want to invest in fund administration.” JPMorgan is developing a generic outsourcing product that will provide 80% of the client’s needs. The remaining 20% will be individually tailored to each client. “We want to get the first, generic part right, and we will, before we open the doors to a number of other outsourcing deals,” says Bourgi. Consequently JPMorgan will be working on the Schroder deal this year and will not look at any further outsourcing deals until 2002. “I don’t think anyone could take on more than two per year per region,” he says. One further piece of outsourcing business that could come its way could be from JPMorgan Investment Management, which has an existing outsourcing deal with Bank of New York. When the existing contract has run its course Bourgi says it will definitely pitch for the business, though he states firmly that it will get no special favours just for being part of the JPMorgan organisation. In other developments this year JPMorgan has helped launch EquiLend, a global web-based platform for the securities lending industry that looks to streamline transactions between borrowers and lenders. Following the Schroder tie-up it has struck other significant deals in the past 12 months. In China, looking at the potential future of Chinese mutual funds, it has made strategic alliances with the Bank of Communications, Shanghai, and China Construction Bank, Beijing In the UK, it has continued to land big pension fund accounts. It was appointed global custodian to £30 billion ($42 billion) in UK and international assets for the BT Pension Scheme and Post Office Pension Plan. In the US, the Vanguard Group appointed JPMorgan as custodian for six of its mutual funds with $157 billion of assets. It also picked up a $6.5 billion account from the Commonwealth of Virginia Treasury Department, handling custody, account valuation, securities lending, performance measurement, internet technology and account record keeping. |
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