Fiducitation: Global Custody Update, Vol. V,
April 2002
Author: Brian O’Keeffe
Date: April 14,
2002 © 2002 Fiducite.com, Inc.
Fiducitation: A
synthesis of public Internet resources on the topic.
Instructions: Use the Table of Contents to navigate the document. Each citation has up to four distinct parts: Annotation, Clip, Source, and Cached File. Our Annotation and Clip (text or graphic from source document) help you decide whether to view the document. The source document may be viewed by clicking on the Source URL or by opening the embedded Cached File. All information is attributed to its source.
This is a monthly update of Global Custody news concerning
the industry and the activities of the major participants: State Street,
Morgan, BoNY, Citi, Deutsche Bank, and Mellon. The major topics of the
newsletter include General News; Money Won/Lost ; New Products; and Other
Business.
Consolidation continues to be an issue amongst
custodians. Most large financial
institutions expanded tremendously during the second half of the nineties in an
attempt to be a “one-stop” financial solution. New businesses were launched,
and mountains of resources were devoted to the expansion of financial empires.
As worldwide economies have contracted and public equity transaction volumes
have fallen, large Financial institutions are increasingly being forced to
identify their core businesses, focus on them, and shed their extraneous
activities.
In some cases, this means the sale of units. This month,
rumors surfaced that AMP is looking to sell their securities services
outsourcing unit. In other cases, banks have simply closed up shop and moved
on. ABN AMRO shut down their US Investment Banking operations, shedding 550
workers and admitting defeat in an industry they only recently entered.
Custodians continue to try to increase efficiencies in order
to wring more profits out of the same (or shrinking) asset bases. This has led to a devotion to STP
technologies, as well as a redefinition of the way the customer interacts with
their custodian. Self-service
operations are the subject of an interesting SunGard survey highlighted below.
The raging feud between Euroclear and Clearstream continues,
and this month we have included a commentary on the future of the
conflict. It appears that cooperation
between the two is all but hopeless, so Global Investment Services examines the
future of the competition between the two European Settlement systems.
Author:
Banks Tell SunGard Self Service Customers Cost Less
Annotation:
SunGard
commissioned a survey to study banks motivations for increasing the
self-service abilities of the banks’ customers. Their findings, and their
analysis of banks motives and performance, are detailed in this article.
Clip: The survey found that banks are concerned primarily
with driving down costs rather than giving clients real-time access to
information. Indeed, most feel daunted by the cost and complexity of the
technology needed to provide effective real-time customer access. (SunGard
adds, predictably but perhaps rightly, that this reflects ignorance of the
quick-and-easy solutions available from vendors.) But the survey authors argue
that giving customers access to information on both cash and securities
transactions in real-time will not only drive down costs by cutting call centre
overhead and speeding up the resolution of exceptions. They say it will also
improve customer retention rates via value-added services, and reduce
operational risk.
Source: http://www.globalcustodian.com/main.jsp?type=newsshow&id=1043
Cached File: 
Last Man Standing
Annotation:
This
article from Global Investment Services examines the future of the relationship
between Clearstream and Euroclear.
Clip: The recent acquisition of Clearstream by Deutsche
Börse has effectively silenced those observers calling for ICSD consolidation.
But with any hope of a merger now shelved, can we expect to see increased
competition in the arena?
Source: http://www.globalcustody.net/news_latest/?global-investment-services,390
Cached File: 
Most Recent Asset Size Information
Annotation:
We
were unable to get most recent asset size information. Our source for this
information, the globalcustody.net web site has not been updated with
information. The following two cached files show figures as of March 12, 2002. We will include the April
figures when they become available.
Source: http://www.globalcustody.net/
Cached File: 
CitiBank Agrees to Move Forex Operations to State Street Platform
Annotation:
State
Street gained a victory for its trading systems by winning an agreement from
CitiBank to move its business to the State Street F/X platform.
Clip: Citibank, long world leader in foreign exchange, has
agreed to place client business via FXConnect, the electronic forex system
created by State Street. The Boston-based bank announced today that Citibank
will deal on behalf of clients via the multi-bank electronic foreign exchange
trading system State Street provides via its Global Link network.
Source: http://www.globalcustodian.com/main.jsp?type=newsshow&id=1051
Cached File: 
Bank of New York Buys Beacon Advisors
Annotation: Showing its desire to expand beyond just
securities services, BoNY has increased its commitment to high net worth
advisory business with its acquisition of Beacon.
Clip: Newton P. S. Merrill, senior executive vice president
at BNY, said, "Our acquisition of Beacon Fiduciary Advisors further
affirms our commitment to the private client services business in New England,
and we are extremely pleased that an organization with the fine reputation and
investment track record of Beacon has agreed to become a part of BNY. We look
forward to the opportunity to offer BNY Asset Management's full array of
services to Beacon's current and prospective clients."
Source:
http://www.globalcustodian.com/main.jsp?type=newsshow&id=1022
Cached File: 
CitiBank Web-Enables Compliance Reporting System
Annotation:
Citigroup
has expanded and web-enabled its system used to record and report pension
compliance.
Clip: Citibank’s pension compliance monitoring system allows plans
to monitor investment managers activities to ensure guidelines are followed and
to guard against unacceptable risks. The system sorts violations data by a
variety of categories, such as date, instrument, asset class, investment
manager and plan, which provides plan sponsors with significant flexibility and
detail for managing risks.
Source: http://www.citibank.com/corpbank/securities/pressreleases/compliance.pdf
Cached File: 
CitiGroup Launches CitiConnect For Securities In Asia
Annotation:
CitiGroup
(through Saloman Smith Barney) has launched its CitiConnect platform in
Asia. The product has already been
rolled out in Europe, but has now been adapted and updated for the Asian
securities markets.
Clip: SSB’s electronic trading system now has the capability of integrating with Citibank’s global direct clearing platform to provide a cost-effective equities trading and clearing service for retail brokers and private banks. This new service is expected to offer the Asian retail market an efficient cross-border trading
platform.
Source: http://www.citibank.com/corpbank/securities/pressreleases/citiconnect.pdf
Cached File: 
The Corporate Actions Effect
Annotation:
While
Global Trade systems have improved immeasurably over the last decade, the
processes to deal with corporate actions have not changed significantly. More
and more, this asset maintenance activity is becoming a large use of time and
resources in the asset management industry.
Clip: From the simple annual dividend to spin-offs, rights
issues and take-overs, if you are involved in the equity asset class, corporate
actions will be important to both your procedures and your systems. From
internet dealing services through to stockbrokers, asset managers, hedge fund
managers and investment banks, anyone involved in equities will be affected by
the speed and accuracy with which corporate actions can be reflected in their
STP systems.
Source: http://www.globalcustody.net/news_latest/?back-office-focus,386
Cached File: 
Learning to Play the Relationship Game
Annotation: Despite being a service business, Global
Custody has too often ignored the relationships it has with its customers.
According to Global Investor, a tighter competitive environment has forced
custodian to devote more time and effort to customer satisfaction.
Clip: Keeping clients happy should be the goal in any
service industry. But many custodians are just waking to the fact that client
relationship management (CRM) has to be a key part of their business. That a
number of custodians have recognized that they have problems with CRM is a
significant step in the right direction. That they've begun to throw technology
dollars at the issue is an additional bonus. But neither is enough.
Source: http://www.globalcustody.net/news_latest/?global-investor,393
Cached File: 
Dutch Banks Starting to Embrace Open Architecture
Annotation: The large,
multi-service banks have historically dominated the Dutch market for investment
management services. However, driven by
demand from wealthy customers, the giants have started to offer third party
investment products.
Clip: The move towards open-architecture has largely been
influenced by the needs of high-net-worth investors, who have more knowledge of
investments and funds. Despite this, the option to add third-party products is
being canvassed from a retail banking perspective, said Edzard Hoyng, head of
marketing-mass affluent at ABN AMRO, in Amsterdam.
Source: http://www.globalcustody.net/news_latest/?global-fund-news,394
Cached File: 
AMP Puts Cogent on the Auction Block
Annotation: While swarms of banks look to expand their
outsourcing capabilities, Austrlian Financial Services Group AMP is looking to exit
the business through the sale of their subsidiary, Cogent. Global Investor
examines the rationale behind the decision, as well as a number of possible
buyers for the company.
Clip: Cogent put
in a decent performance in 2001, with profits up 33% to A$24 million. Growth in
external fee income was particularly impressive, up by 58% to A$122 million.
But it is an expensive business to run, with a cost-income ratio of 86%. Any
acquirer would clearly be looking for economies of scale.
Source: http://www.globalcustody.net/cgi-local/shownews.cgi?global-investor,392
Cached
File: 
State Street and Enron
Annotation: A small, but
interesting story, State Street agreed, and then rethought their agreement to
take over the management of Enron’s pension assets.
Source: http://www.globalcustodian.com/main.jsp?type=newsshow&id=949
http://www.globalcustodian.com/main.jsp?type=newsshow&id=999
Cached File: 
State Street CFO to Leave Company
Annotation: State Street
lost another key executive when CFO Ronald O’Kelley left last month for
“personal reasons”. This is another in
a series of recent executives to leave State Street, and while it does not
appear to be sue to any dissatisfaction with the firm, it is a concerning
trend.
Clip: David A. Spina, chairman and chief
executive officer of State Street, said, "Ron is an executive of great
integrity and character and has been a valuable member of our team since
joining the company in 1995. Having worked closely with him throughout his
tenure at State Street, I appreciate the significant contributions he's made to
the success of State Street as it has become the world's leading provider of
services to sophisticated global investors. We wish him the very best in his future
endeavors."
Source: http://www.statestreet.com/company/media/press_release/20020312_1.html
Cached
File: 