Awards for Excellence 2002
State Street
In tough market conditions fund managers start to count their pennies more carefully. When the returns are no longer flying as high as before, there’s an obvious need to find ways and means to save precious basis points any way they can.
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State Street: As its fund manager clients seek ways to cut costs State Street is enjoying a bumper year while positioning itself as more than just a custodian |
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It’s in this environment that custodians, well some at least, have been thriving, as their fund manager clients turn to them in their search for greater efficiency in their back and middle offices. “There is an interesting phenomenon at work,” says Ron Logue, president and chief operating officer of State Street – this year’s best at global custody. “In down markets like this our business picks up. The investment management community investigates alternatives to how it operates because there is a greater need.”
Logue says State Street is enjoying a bumper year for business. “We have sold more business in the first six months of this year than any other year,” he says. This trend is set to continue with little prospect of a strong recovery for the markets. State Street is receiving record numbers of RFPs and demands for presentations.
State Street, has, of course, long been a big name in custody, alongside major rivals such as Bank of New York and JPMorgan (formerly Chase). Indeed those three dominate the tables of assets under custody.
BNY is rated the largest, with around $6.9 trillion, JPMorgan has $6.5 trillion and State Street $6.3 trillion. Citibank is next nearest but some way back with $5 trillion.
However State Street likes to set itself apart from the competition and wants to be seen as more than just a custodian. As fund managers look to outsource more of their non-core business, they look to the securities services providers to take on ever greater workloads and Logue says State Street is set up to do this. “They want help in integrating their investment operation,” he says. “They are acquiring, or being acquired, or merging with other operations. They want to integrate for reasons of economy of scale. They are trying to get into new markets, they are trying to improve their investment products and they want people to take those headaches away from them.”
State Street is certainly scoring well among clients, according to leading industry surveys. Euromoney’s sister magazine Global Investor rates it above the other largest custodians in this year’s annual poll, overtaking JPMorgan, its closest competitor.
Julian Marshall
