NAB Asset Servicing’s 22-year reign as Australia’s largest custodian has come to an end, according to the official market share figures to be published by the Australian Custodial Services Association within the next day or two.
The new top of the charts and, for a long time, the largest securities servicing firm in the superannuation sector, is JP Morgan. The change follows an unprecedented level of tender activity for securities servicing by big super funds and managers over the past two years.
However, the latest figures, for market shares as at June 30, are expected to show that while JP Morgan has continued to demonstrate steady growth in a difficult climate, NAB has suffered from its proposed sale in 2014 and subsequent re-commitment by the bank to the custody operation.
In the intervening period since the sale proposal was look at NAB has forged a new global relationship with Citi, which itself entered the master custody area for industry funds in 2014 – winning HostPlus. NAB ended its former relationship with BNY Mellon.
The recent frantic tender activity is expected to slow down now. NAB announced last week that it had re-won the contract for Equip Super and is expected to announce another new deal within the next week or so. NAB is the sole remaining Australian-owned master custodian, which continues to be a compelling selling point for some funds.
The next big tender, in which neither NAB nor Citi is participating, is that for the $70 billion NSW Treasury Corporation, which is rationalising the three existing relations it has, with BNP Paribas, JP Morgan and State Street. A fourth potential provider, Northern Trust, is said to also be in the mix.
NAB aggressively chased the then-fledgling master custody market in the 1990s, challenging the dominant American banks – State Street and JP Morgan – and becoming number one by a wide margin for many years.
However, in a changing market and with the hiccup of a botched sale process by the bank, NAB has lost more than it has won in the past couple of years.
The custody market has three segments: domestic, global and master custody, which don’t always overlap. The largest domestic custodian, for instance, is HSBC, which does not figure on any of the custody briefs for big super funds.
– Greg Bright