State Street to review sub-custody after Westpac sale

Westpac’s largest sub-custody client, State Street Investor Services, will review its arrangements in Australia following Westpac’s sale of the unit to HSBC.

David Travers, the head of investor services for State Street, said yesterday: “We need to keep our options open. There are other providers in the market. We want to make sure we have a best-of-breed sub-custody offering.” He said State Street needed to understand what the service offering was from HSBC. “Initially it will be very similar to Westpac’s, but they will transition this to the HSBC model … We’re reviewing the market but we’re not going to do a formal tender.” Principal of Mercer’s Sentinel admin consulting group, Lounarda David, said she was eager to hear from HSBC regarding its sub-custody strategy. NAB and ANZ were quick last week to assure the market their sub-custody businesses were not for sale, but David pointed out that “Westpac said the same thing a year ago”. State Street’s Travers said that HSBC had not been seen previously as a market leader in custody in Australia, although “clearly they now will be”. State Street used HSBC for sub-custody in some other markets in Asia, he said. State Street has more than $300 billion under administration in Australia, about $240 billion of which is in custody. While the firm does not reveal how much is placed with its sub-custodians, it is likely that more than $100 billion is with Westpac. State Street also has some assets with Citigroup. At presstime, HSBC Securities Services chief, Peter Snodgrass, had not been cleared by headquarters in Hong Kong to make any post-transaction comment. Snodgrass worked at Westpac Custodial Nominees for more than 20 years, before shorter stints at Commonwealth Custodial Services and BNP Paribas Securities Services.