Barclays Global Investors (BGI) is to consolidate its European custody, fund administration and fund accounting business with JP Morgan Investor Services.
“By consolidating our service providers, we can streamline our operating model, allowing us to take advantage of scale across the business,” says Malcolm Smith, Head of Investment Operations at BGI. “We feel JPMorgan Investor Services has the breadth and capability to service our diverse product range for our European client base.”
The deal is a massive coup for Morgan, with BGI Europe alone managing assets of over US$263 billion from London. It will also come as a blow to Investors Bank & Trust, which won the outsourcing contracts from BGI in the United States and Canada, but the Boston-based bank presently lacks an operation in London. It has facilities in Dublin, where 200 people are now working for IBT, but its efforts to open an operation in London have yet to come to fruition.
At Investors Bank in Boston, SVP Rob Mancuso is sanguine. “Since Investors Bank is the outsourcing provider for more than 65% of BGI’s assets, we believe that BGI sought to diversify their service provider, rather than consolidate all of their assets with one provider,” he says. “Investors Bank currently services all of BGI’s U.S. and Canadian assets, a total of more than $550 billion. On the heels of the successful conversion of the U.S. operation, BGI Canada outsourced their operation to Investors Bank in 2003.”
Morgan warns that the outsourcing is still at the “exclusive negotiations” stage, but the transition of services is expected to start later this year. The contract covers the servicing of a range of funds domiciled in the UK, Dublin, Jersey and Luxembourg, the majority of which are already serviced by third party providers.
“We have appreciated the opportunity to support BGI around the world for a number of years, and we are eager to expand the range and scope of our partnership with BGI in Europe,” says Tom Christofferson, Senior Vice President, Global Client Management, JPMorgan Investor Services, in London.