As another year passes, Global Custodian is celebrating a record year of online traffic as we set new highs in our website views. Thanks to consistently breaking the biggest stories within the world of securities services and taking a deep-dive into some of the most innovative new releases from custodians, fund administrators and the like, 2019 was our best year yet.
Here, Joe Parsons, takes a look at the top 10 most read news stories from the year and gives his take on why they were so impactful.
The news that BNY Mellon’s chief executive, Charles Scharf, would leave to join Wells Fargo, came at the end of a hectic week of Sibos in London. Nevertheless, it did not stop us providing our own analysis on this seismic people move. Scharf left the world’s largest global custodian two years after he promised to overhaul the business and its technology.
To some extent, he did deliver on his word by increasing the bank’s technology budget from $2.4 billion to $3 billion, and led a significant recruitment programme to boost its digital capabilities. However, the majority of the work he set out to accomplish remains unfinished, and now falls on the shoulders of interim CEO Todd Gibbons to take on.
Deutsche Bank’s decision to radically restructure its investment banking unit by exiting equities altogether was picked up by all the major news outlets, but we decided to focus on its once-prized prime brokerage division. The decision to sell the business to BNP Paribas marked the end of tumultuous period for the German bank, defined by several high-profile clients pulling their business.
The news of the sale of the business to the French bank then sparked even more client exits, with tens of billions of dollars of client balances moving to rivals including Bank of America, Barclays, JP Morgan and UBS.
This story helped GC start the year with the bang. State Street appointed Nadine Chakar as the new head of its global markets business. Chakar, a GC Legend and a former long-serving BNY Mellon executive, now oversees all of State Street’s trading, product and operations platforms. Prior to joining the Boston-based global custodian, she was the global head of operations for the global wealth and asset management division and Manulife.
Chakar is one of the biggest names in the business, which is no surprised why her move garnered so many page views. Earlier this month, Chakar was featured as one of the 30 individuals to shape the future of the industry.
In October, State Street revealed a new securities finance platform that allows direct lending between its hedge fund and beneficial owner clients. The new peer-to-peer platform would leverage State Street’s agency lending and enhanced custody businesses, and enable electronic matching of principal loans between lending and borrowing clients.
Peer-to-peer lending has generally represented only a very small percential of the overall securities finance industry, and the majority of participants have yet to fully transition to such solutions for securities lending. However, the news of the platform could be a turning point as global custodians continue to launch initiatives to encourage end-users to transition to the model.
In May, I travelled to New York to sit down with Teresa Heitsenrether, global head of securities services at JP Morgan, to discuss how its custody and fund services division has become one of the most consistently high performing businesses in the industry.
We talked about a number of things, including how she is importing talent and experience from the bank’s markets teams into the custody business, as well as the significant amount of technology investments they are making. However, what I found most interesting was the lessons it has learned from integrating BlackRock’s $1 trillion of assets into its custody division, and the new products and services it has launched since then.
BNY Mellon followed up on its ground-breaking deal with BlackRock in April with another front-to-back data sharing alliance with Bloomberg and its order management system – AIM. The partnership with Bloomberg could involve a wider range of mutual clients, due to the fact that AIM is the most-used OMS by asset managers, who can then use Bloomberg to gain direct access to BNY Mellon’s custody and fund accounting data.
BNY Mellon went onto sign another partnership with SimCorp, providing the bank with an extended reach in Europe to distribute its data to asset managers. The alliances have become the cornerstone of BNY Mellon’s open architecture platform, allowing it to work with the trading platforms of their buy-side clients.
Deutsche Bank’s wild year was not restricted to its investment banking business, as surprising news also emerged from its securities services division when Fiona Gallagher announced she would leave as global head of the business to join Wells Fargo. Gallagher’s departure also marked a transition of the leadership role from London to New York, where it would be taken on by Michaela Ludbrook, head of the global transaction banking (GTB) franchise for the Americas.
Gallagher took on the role in April last year in addition to her role as head of Ireland, following the exit of GC Legend Satvinder Singh in December 2017. In March, Gallagher was voted as the Industry Person of the Year at Global Custodian’s 30th Anniversary Leaders in Custody Awards dinner, as voted for by her peers.
Global Custodian frequently publishes some of the biggest custody and fund administration deals that are struck in the industry, but vary rarely do we ever get to publish a story when a deal falls through. In January we did just that, when we revealed that a landmark fund administration deal between BNP Paribas and DWS was terminated.
The mandate was announced in June 2018 as DWS, formerly Deutsche Bank Asset Management, picked BNP Paribas Securities Services to administer €240 billion of fund assets in Luxembourg and Germany. It was also set to take on 80 DWS employees as part of the deal. Obviously, that did not come to fruition.
To find the largest major acquisition in the custody space, you would have to go back to 2013 when Citi agreed to buy the custody and securities services business of Dutch Bank ING in Central and Eastern Europe. This is largely because the custody market has now whittled down to just a handle of players controlling the majority of institutional assets.
French asset servicer CACEIS broke this dry spell when it agreed to acquire Dutch custodian KAS Bank for €188 million, enabling it to expand its services to local pension funds and insurance companies. The story was significant as up to this point, most M&A activity has been contained within the fund administration industry. CACEIS would then go on to acquire Santander Securities Services in Spain and Latin America.
It turns out whoever leads Northern Trust’s technology strategy is a big fan of Keanu Reeves, after the custodian announced the launch of a new event-driven technology architecture called Matrix. The new platform would centralise all of the data captured by its underlying custody, fund administration and transfer agency businesses, and create ‘a single point of truth’ for all of its data.
The Matrix platform, set to be rolled out at the beginning of 2020, will also help Northern Trust significantly reduce workflow costs, and increase productivity through the automation of transfer agency data.
Editor’s Choice: From Citi to United: Securities services veteran departs bank with view to purchase Premier League football club
Partly due to the securities services world crossing over with the Premier League for what must surely be the first time, this story was my favourite of the year to write. In addition, this allowed us to run with one of the more creative headlines of the year, which will resonate with the football fans among our audience.
Here we reported that, Global Custodian legend, Alan Pace, had left the US bank after 11 years, and was reportedly setting his sights on purchasing a UK Premier League football club.
Earlier in the year, Pace had set up an investment firm called ALK Capital alongside US businessman Dave Checketts, which was reportedly interested in buying Sheffield United Football Club.
While these reports had surfaced throughout the year, Global Custodian discovered that Pace officially left his role at Citi in October.