As flagged earlier this month, JP Morgan has snaffled the unified custodian role at the $30 billion plus ACC fund, knocking Northern Trust out of a job in the process.
According to an ACC spokesperson, the transition of Northern Trust-held assets to JP Morgan – amounting to about $5 billion of global securities – should be completed before the end of this year.
Under the previous custodial arrangements, JP Morgan managed ACC’s Australasian assets – which represent more than 80 per cent of the fund – while Northern Trust took care of the offshore component.
It is understood the fund’s total custody fee rates will drop as a result of the JP Morgan deal, however, the ACC spokesperson declined to quantify the cost savings.
“ACC is pleased with the strategic commitment that JPMorgan demonstrated as part of the procurement process,” the spokesperson said. “ACC will benefit operationally by having one custodian but the price is obviously commercially sensitive.”
While ACC doesn’t separate out custody costs in its annual report, the similarly-sized New Zealand Superannuation Fund (NZS) splashed out about $4.2 million in custodian fees during the 2014 financial year – most of which would’ve accrued to the fund’s principal supplier Northern Trust.
However, NZS has a different mix of assets compared to the ACC fund, with about 80 per cent allocated to global passive portfolios.
ACC began its search for a single custodian almost a year ago, with JP Morgan quickly emerging as a front-runner.
As well as JP Morgan and Northern Trust, the ACC spokesperson said other providers bid for the role.
“There was a full procurement process which was openly contested and contained a number of different criteria,” the spokesperson said. “These criteria covered operational, organisational and commercial qualities. The decision was made based on JPMorgan’s overall position in these categories.”
JP Morgan is also the custodian for two other Crown Financial Institutions: the $4 billion Government Superannuation Fund, and, the $1.8 billion National Provident Fund.
In a statement, Bryan Gray, JP Morgan Investor Services head of sales and client management Australia and New Zealand, said the appointment came “during an important period in the execution of [the ACC fund’s] strategic business plan”.
“JP Morgan has proven throughout this process that we can service the immediate and future needs of ACC,” Gray said in the release. “Our global networks combined with local market knowledge and investment in technology and solutions, positioned us well to extend our partnership with ACC.”
Meanwhile, last week both JP Morgan and Northern Trust saw changes in their respective top custody jobs.
JP Morgan appointed Nadia Schiavon as head of custody and fund services for Australia and New Zealand, replacing Henry Capra in the role.
Capra, who will be leaving the business, joined JP Morgan in the position in 2013 after a three-year stint as chief operating officer at BlackRock Australia.
Before joining JP Morgan in 2011 as head of treasury services, Schiavon served in various senior roles at Citi over 23 years
Across at Northern Trust, Rohan Singh is to move back to Singapore after four years as head of Australia and New Zealand for both asset servicing and asset management. He will be replaced by Madeleine Senior, who has worked at Northern Trust since 1995. Senior was head of business development for Northern Trust’s asset servicing business in Europe, Middle East and Africa (EMEA) and before that was managing director of the Nordic region.
Singh, who oversaw a period of rapid growth in new business for Northern’s asset servicing in Australia during his time in Melbourne, becomes head of Singapore and SE Asia business, still for both asset servicing and asset management. He had previously headed up asset servicing sales in Singapore before moving to Australia in 2011.