J.P. Morgan loses custody contract

A $34 billion public sector fund has appointed a new custodian, ending a 19 year-long relationship with J.P. Morgan.

Funds SA has selected Northern Trust as its custodian, after a long tender process.

In September last year, Funds SA said it had invited seven custodians to submit proposals: the incumbent J.P. Morgan, NAB, Northern Trust, RBC, State Street, BNP Paribas and Citi. It appointed Mercer Sentinel to advise on the tender process.

Funds SA chief executive officer Jo Townsend today said: "We were very pleased with the level of interest and quality of submissions from the tender respondents. We look forward to partnering with Northern Trust during the next phase of Funds SA's evolution."

"We would also like to acknowledge J.P. Morgan, whom we have had a very strong and productive relationship over many years during which Funds SA has changed and grown significantly."

Northern Trust will commence as the custodian in early 2020, following the transition.

"We are delighted to be working with Funds SA to support their growing business and enable them to focus on their core investing activities," Northern Trust country executive Angelo Calvitto said.

"As institutional investors look to enhance their operating models to meet their investment needs, they require a global asset servicing partner with local insights and expertise. They also want to work with an organisation that delivers a high-level of client service, supported by leading-edge technology."

Funds SA manages money for public sector superannuation schemes, insurers and endowment funds.

Total assets under custody stand at $3.58 trillion, after falling 1.2% in the half year to December following lackluster markets, according to the Australian Custodial Services Association (ACSA).

J.P. Morgan had a 22% slice of this pie with custody contracts for the likes of AustralianSuper and HESTA. It first toppled NAB Asset Servicing from the top spot in the first half of 2016.

Northern Trust was the sixth-largest custodian ($403 billion), and has several public sector funds as its clients including Future Fund, QIC, Commonwealth Superannuation Corporation (CSC), Government Employees Superannuation Board (GESB), New Zealand Superannuation Fund.

Read more: Funds SAJ.P. MorganNorthern TrustAustralian Custodial Services AssociationAustralianSuperJo TownsendMercer Sentinel
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