BNY Mellon wrestles Microsoft custody mandate from Northern Trust

The deal marks Microsoft’s first change in custodian in a decade for its $130 billion in assets.

By Jonathan Watkins

BNY Mellon has been selected by Microsoft as the custodian of its treasury group which manages $130 billion in assets.

The deal marks Microsoft’s first change of custodian in a decade as it moves on from its previous 10-year agreement with Northern Trust.

According to a statement from BNY Mellon, the mandate will feature a cross-business solution that will help Microsoft to better manage and automate its portfolio processes.

These services will include custody, collateral management, performance measurement and liquidity services.

 “As we considered a new strategic provider, we looked for a single operating platform which could automate key processes and help us be more efficient,” said George Zinn, corporate vice president and treasurer of Microsoft.

“We look forward to continuing to collaborate with BNY Mellon and grow the relationship, including the use of technologies like Microsoft Teams as the hub for managing and collaborating on this project.”

BNY Mellon’s platform will service Microsoft’s global custody, collateral management, derivatives processing, institutional accounting and foreign exchange needs.

In the first quarter, BNY Mellon reported an increase of 3% in assets under custody and administration (AUC/A) to $34.5 trillion, primarily due to higher market values and net new business.

Global Custodian has reported on three major BNY Mellon client moves this year prior to the Microsoft deal, including being re-contracted by the Employees’ Retirement System of the State of Hawaii to provide global custody and associated services and a fund administration deal with SkyBridge Capital, the $9.2 billion hedge fund.

More recently, the custodian was selected by Jersey’s largest and oldest health insurer, Horizon Healthcare Services, to provide custody and accounting services.

“We are very excited to begin a new chapter in our relationship with Microsoft and are confident that we will be able to help its Treasury business continue to simplify its processes,” said Hani Kablawi, CEO of Asset Servicing at BNY Mellon. “Our fully integrated global client technology ecosystem will deliver a sophisticated solution that is both flexible and reliable to meet Microsoft’s needs.”