BlackRock made a ‘one-off decision to diversify’, says State Street chief

State Street CEO Joseph Hooley has explained the reasons for BlackRock moving $1 trillion in assets from State Street to JP Morgan.
By Paul Walsh
The shift of $1 trillion dollars of BlackRock’s assets from State Street to JP Morgan has been put down as a “one-off adjustment to diversify”, according to the chairman and CEO of State Street.

The custodian will retain a large partnership with the world’s largest asset manager, as it continues to provide custody and fund services for BlackRock’s ETF business.

Global Custodian reported yesterday that BlackRock has selected JP Morgan to provide custody and fund services for over $1 trillion of largely common trust funds.

“I view it as a kind of a one-off adjustment for BlackRock to get better diversified, we’re pleased and thrilled with the BlackRock relationship and I think it will continue to grow,” said Joseph Hooley, CEO and chairman of State Street.

“As they grew to $5.5 trillion in assets, they came to us and say that they needed to consider some diversification, while not our first choice we appreciate where they were coming from.”

The transaction is among the largest custody deals ever signed and it is believed that JP Morgan will onboard the assets over the next two years.

As the JP Morgan deal was announced, State Street also revealed an extension of its relationship to provide custody services to Allianz Global Investors.

Hooley also suggested that the shift did not represent State Street’s policy or a change in industry trends.

“We think BlackRock will continue to grow us and by no means do I view it as a trend, more as a one-off situation,” said Hooley.

“The overwhelming trend in the industry is to consolidate with fewer providers. For reasons of cost, it’s more expensive for an asset manger to deal with multiple counter parties.”