In one week two banks have said they will close their transition management businesses.
On Friday Credit Suisse said it was exiting transition management with the closure of its American business by the end of the month. Yesterday, J.P. Morgan confirmed it is exiting the business in all regions except Asia Pacific.
The events were first reported by Global Custodian’s sister title aiCIO.
Fred Fogg and Lance Vegna run Credit Suisse’s American unit, comprising fewer than five people. The bank’s business in Europe, Middle East and Africa (EMEA) is unaffected.
Credit Suisse declined to comment.
Meanwhile, a spokesperson for J.P. Morgan confirmed it is winding down the business in EMEA and the U.S. over the next few months.
The Australia transition management business will continue to serve clients in the Asia-Pacific region. The Sydney-based team is understood to be a core part of the investor services business, with clients including superannuation funds, asset managers, pension funds and a range of government entities.
J.P. Morgan’s investor services division was reorganized last year as part of the integration of its Treasury and Securities Services business, which includes Worldwide Securities Services (WSS), into a new Corporate and Investment Bank (CIB) division and the creation of the Agency Clearing, Collateral Management and Execution (ACCE) business. ACCE integrated J.P. Morgan’s clearing, collateral management and futures and options businesses, with transition management falling outside the scope of these core businesses.
Transition management has come into the spotlight recently following overcharging scandals. The U.K. Financial Conduct Authority’s launch of a highly anticipated investigation into the conduct and transparency of industry providers is expected to determine if there are wide-scale issues that it needs to act on. The FCA already has begun talking to providers following the recent scandals involving overcharging on transition management deals including the Royal Mail Pension Fund and the Kuwait Investment Authority. It is investigating the markups as part of its wider investigations into transition management.
The investigations are not related to the planned closures of the Credit Suisse and J.P. Morgan businesses, however.