Northern Trust Acquisitions Highlight Answers to Market Concerns

A senior official at Northern Trust says the groups acquisition of Bank of Ireland Securities Services represents the industrys need to refocus attention across several faculties.
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Northern Trusts purchase of Bank of Ireland Securities Services (BoISS) for 60 million this month has highlighted the industrys need to refocus its attention on the multimarket providers relationship management function, in order to keep and service clients in a qualitative manner, said Northern Trusts senior official.

While statistically I have seen 50 banking relationships being reduced to 30 and 80% of indigenous providers falling to 10%, I do think this is a good thing, as multimarket providers have the scale and revenue and investment in the business which can create further market capabilities, said Andrew Osborne, senior VP head of worldwide network management at Northern Trust, while speaking at the NEMA 2011 conference in Croatia. The BoISS acquisition has represented the industrys need to refocus efforts on network relationship management and dealing with macro issues for the clients.

Announced in February 2011, Northern Trust purchased the largest Irish-owned asset administration provider BoISS for 60 million this month, which will see Northern Trusts combined assets under custody and administration in Ireland rise by around 70 billion.

In addition, earlier this year, Northern Trust confirmed reports that it is buying Omnium, the fund administration arm of Citadel with approximately $70 billion in assets under administration. It has been reported Northern Trust will pay $100 million for the business.

Omnium will be integrated into Northern Trusts Corporate & Institutional Services business, and will be renamed Northern Trust Hedge Fund Services, LLC. The business will provide comprehensive administrative and middle office services including trade processing, valuation, real-time reporting, cash management, accounting, collateral management and investor servicing.

While speaking at Structure In The Spotlight. Local vs. Multi-Regional and Subsidiaries vs. Branches – Is There A Best Practice Doctrine To Follow Now? Osborne commented on what sub-custodians need to do to survive the wave of consolidation.

While I think the sub-custodians have developed market capabilities, there are some nagging concerns over whether the quality of their relationship management functions have kept pace with the quality of the service capabilities,” said Osborne. “The sub-custodians will need to invest greater into its resources for relationship management functions and recognise that this will be a key differentiator and is one of key issues we are facing in acquisition of sub custody service.

Please click here for all coverage of the NEMA 2011 conference in Dubrovnik, Croatia this week with Global Custodian.

(LB)

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