Mercer is about to appoint a new securities servicing partner for its $25 billion under management in investment and super trusts – Northern Trust – following a review. The news, expected to be announced this month, is another blow for incumbent NAB Asset Servicing.
The review commenced last year and by earlier this year it was clear that Mercer was going to make a change. It is understood the shortlist included BNP Paribas, State Street and Northern Trust, which have shared most of the spoils in recent custody tenders.
Following an extensive competitive tender process Mercer has appointed Northern Trust Company (NTC) to undertake custody and investment administration of Mercer’s investment and superannuation funds in Australia.
Mercer confirmed the appointment today (July 13). Simon Eagleton, leader of Mercer’s Investments Business in the Pacific market, said: “NTC was appointed due to the strength of its offer to meet Mercer’s business requirements and growth ambitions in both an institutional and retail investment context.”
“NTC’s significant ongoing investment in technology, ability to work with us to improve efficiency, and its enhanced risk management capabilities were all important considerations for us.”
Mercer’s inhouse custody, efficiencies and transitions firm, Mercer Sentinel, assisted in the review process, however, the chief executive of Mercer Sentinel, Peter Baker, stood down from the work because of a perceived conflict. Baker was the chief executive of BNP Paribas Securities Services until he moved to Mercer late last year.
The past 12 months or so has seen an unprecedented level of tender activity in securities servicing, particularly among super funds. NAB, still the largest master custodian in Australia, has lost several on the trot: UniSuper (to BNP Paribas), VFMC (to State Street) and part of QIC (to Northern Trust) in the last two months. It, nevertheless, has retained some as well, such as CARE, and picked up new funds manager business, which tends to fly under the radar.
Two big ones still to be announced are Telstra Super, which is also with NAB, and ACC in New Zealand, which is an interesting one. ACC has used two custodians, JP Morgan and Northern Trust, and has decided to have one only in future, (with the former tipped as winner). QIC did the same when it rationalised its two service providers down to one.