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— Mayiz Habbal, Celent

Citi’s takeover of Bisys Group in order to gain an edge in the hedge fund and private equity sectors shows a growing trend towards acquisitions to keep up, writes Gerry O’Kane.

— Mark Kerns, Bank of New York

Bank of New York’s decision to not take-over the remaining stake in RBSI may well prove to be BNP Paribas’ gain as the industry cries out for greater service, writes Roger Aitken.

— Kane: scale is only ‘half the story’

Even before the merger of Bank of New York and Mellon Corporation last December to create the world’s largest securities services firm, the prognosis for a relatively “finite number” of very large players in securities services processing was on the cards. This year the writing might be well and truly on the wall.

When Citigroup announced its fourth quarter results, most of the media comment focused on relatively poor results from the corporate and investment banking business. In spite of higher revenues of 14 per cent, net income declined by the same amount brought on by higher costs.

— Sahai: market favoured us and competitors

When Citigroup announced its fourth quarter results, most of the media comment focused on relatively poor results from the corporate and investment banking business. In spite of higher revenues of 14 per cent, net income declined by the same amount brought on by higher costs.

— Kelly: likely to step up to the helm

Many have praised the BNY/Mellon merger, while others are viewing the new giant with suspicion. Yuri Bender reports.

— Seaman: the UK has lost 20% of the funds

Following a KPMG report highlighting the UK’s “failure” to attract new investment due to an unfavourable tax regime compared with other jurisdictions like Luxembourg, an ex-Schroders head of fund administration predicts “tens of thousands” of job losses in the sector over the next five years.

— Noltsch: goal is to gain market share

BNP Paribas Securities Services’ (BP2S) acquisition of the third-party securities clearing and settlement activity of Bankhaus Carl F Plump (Plump) not only positions the bank as a tier II provider in the segment in Germany for local brokers (marklers) and securities trading banks (Wertpapierhandelsbanken), but clears the way for further commercial opportunities.

Despite steps taken by Wall Street banks to reduce backlogs in the processing of complex credit derivatives under the regulatory glare of the Federal Reserve, continued growth in derivative volumes still poses serious operational risks for buy-side participants.

— Back: firms are reviewing entire value chain

Asset managers are turning their backs on the “lift-out” model of outsourcing in favour of a modular or component-based approach.

According to Suzanne Dence, senior consultant at IBM Business Consulting Services, the lift-out model “is dead” and component-based outsourcing is “the way forward”.

— Seyll: collaborative process to meet client needs

Clearstream, the international central securities depository (ICSD), has hailed three big client wins for its ‘Vestima+’ electronic fund order routing system as proof that market participants prefer a flexible open architecture model that does not “jailhouse” users into settling in a single CSD.

— Closier: pan-European strategy for SGSS

The acquisition of UniCredit’s Italian securities services business by Société Générale Securities Services (SGSS) just two years after its creation has elevated the bank to the third biggest global custodian in Europe, with almost €2000bn in assets under custody.

There are many routes for institutions who wish to get involved with securities lending to take. Paul Wilson from JPMorgan outlines the options on offer.

Deals between NYSE and Archipelago as well as Nasdaq and Instinet.

Luxembourg-based investment funds enjoyed net asset growth of 25 per cent during 2004, rising from $1199.7bn (€931bn) to $1500.3bn according to research by Fitzrovia International, a Lipper company.

Two potential bids now with Competition Commission for next six months.

The ongoing saga of whether the London Stock Exchange (LSE) will finally succumb to a takeover came to a pause following the decision by the UK’s Office of Fair Trading on March 29 to refer two potential bids – from Deutsche Boerse and Euronext – to the Competition Commission.

Alternext, the new and less regulated market for smaller companies, will officially launch on 17 May. Designed as part of a Euronext initiative to enable such enterprises to raise capital in the eurozone, simplified market access and more flexible rules will be offered in return for a commitment to financial transparency and investor protection.

Kas Bank, the Netherlands-based custodian, has declared that its volume of assets under custody is not important, since it makes so much money from value-added services.

— Mortimer: ‘cutting costs sharply with BNY’

Mandate loss comes in wake of poor rating for SSgA in R&M annual survey.

The Bank of New York has pinched a £1.5bn (€2.2bn) mandate from State Street after significantly undercutting its rival’s fees. The poaching comes as R&M’s annual report on custody client satisfaction has revealed that State Street’s service standards have declined more than any other provider in the eyes of clients surveyed.

All eyes are on Euronext now that Deutsche Boerse has withdrawn its bid for the London Stock Exchange in the face of shareholder opposition. A Euronext takeover of the LSE could prove easier to stomach for users and may bring more benefits than the potential German deal.

— Wisniewski: ‘real threat to custodians’

Smaller securities services providers and non-financial firms enter the market.

Competition within the securities services market is set to intensify, with existing operators going after new types of client and brand new non-financial players entering the fray.

Northern Trust has won an outsourcing contract from UK-based Insight Investment in a deal that suggests mid-sized securities services providers could be moving up to challenge the giant players in the market.

Euroclear has warned that the future of Europe’s capital market hangs in the balance. The Brussels-based clearing and banking group has stepped up its war of words with Deutsche Boerse during the past month, leading to both organisations taking somewhat extreme measures to communicate their views to the press.

Survey finds Dublin’s fund promoters have unique form of evaluation.

— Hookings: ‘clients do not know we are running the call centre’

The Bank of New York (BNY) has won a mandate for the split administration of Franklin Templeton’s UK Oeic (open-ended investment company) range of eight funds.

The split brief, which began on December 13, covers transfer agency and administration services including reconciliation and settlement. But Franklin has retained voice contact to service clients. Staff at the firm will also have terminals on their desks with client data provided by BNY for the Ł210.4m (€305.6m) Oeic.

The granting of the mandate follows the relaunch of Franklin Templeton’s Oeic in 2003. Paul Brady, director of international transfer agency at Franklin, said: “Before the re-launch, we were still carrying out the transfer agency manually. With the re-launch of the Oeic and the expected growth in assets, we decided it was the right time to automate the transfer agency. We chose BNY because it was strong technologically and was flexible in its offering.”

The practice of “crossing” should receive a boost in Europe as a result of ITG Europe’s acquisition of E-Crossnet, a rival network in the direct matching of buyers and sellers of shares.

— Foley-Brickley: ‘outsourcing big driver’

Despite losing a €16bn mandate from Sweden’s AP-Fonden, Citibank continues to view Europe as its best battleground, writes Yuri Bender.

An intensifying battle for business in the European custody industry is exerting horrendous pressures on margins, according to Laurens Vis, managing director at Kas Bank in Amsterdam.

— Roessler: ‘fluctuation is always good for us’

BNP Paribas Securities Services is migrating clients to an internal transfer agency system after its strategic partnership with BrainTrade was derailed. Yuri Bender reports.

The global custody business is tough on resources and aggressively competitive.

FT Mandate’s latest survey finds the top dogs are turning increasingly to outsourcing deals, Roxane McMeeken reports.

— Lloyd: timing is right for Austrian entry

BNP Paribas Securities Services is branching out into the Austrian custody market following the launch of its clearing and settlement business in the region.

The custodian has established a direct link to the Austrian central securities depositary, OeKB from BNP Paribas’s Frankfurt branch.

Denmark’s largest pension scheme administrator, ATP, has selected Euroclear’s FundSettle platform to process all its pan-European fund transactions.

ATP will use Euroclear for all its non-Danish fund processing as part of Folkeboersen, its special savings scheme.

Folkeboersen, which means people’s exchange, replaces the E5.8bn SP scheme and aims to give Danish employees greater influence over the investment and management of their pensions.

Subscription and redemption instructions for international funds will be pooled by ATP and sent to FundSettle for order-routing and transaction settlement.

Nordea Bank will provide ATP with cash settlement and custody services.

JPMORGAN TREASURY & Securities Services has acquired a hedge fund administration company in a bid to boost its presence in the alternative investment market.

Tranaut Fund Administration, a privately- owned hedge fund administrator, will join the JPMorgan stable in quarter three this year.

Conrad Kozak, head of strategic business development at JPMorgan, said: “This acquisition demonstrates our commitment to servicing a wide range of products on a global basis.”

INVESTORS BANK & Trust has seen its assets processed for clients climb 34 per cent in the past year after a string of business wins.

— Heller: swayed by Mellon’s ‘numerous accolades throughout the industry’

Mellon Global Securities Services (GSS) has picked up an outsourcing and custody deal with a new branch of the US Teachers Insurance and Annuity Association College Retirement Equities Fund (TIAA-CREF).