BNP Paribas Securities Services Australia will end the global custody relationship begun with Citi out of Hong Kong 14 years ago, as it seeks to shift clients to its parent’s own global custody network, which means they will be serviced from Chennai, India.
The largest Australian client of BNP Paribas SS, AMP Capital Investors, said it expected the transition to be "straightforward" and not affect services, however industry sources said all clients would need to perform due diligence on the French bank’s network of sub-custodians.
"You’re talking about moving away from Citi, which has the largest proprietary branch network in the world," said one observer, who added the shift in time zones from Hong Kong to Chennai would need to be managed carefully by BNP Paribas SS, so that service levels in Australia were maintained.
It is understood the global custody processing will be performed by Sundaram BNP Paribas Securities Services, a joint venture formed last November between the French bank and the business process outsourcing arm of Chennai’s Sundaram Finance.
Clients will continue to be banked by Citi in territories where it is part of BNP Paribas’ sub-custody network, particularly in areas of Citi dominance such as emerging markets. However other sub-custodians will change – for instance, BNP Paribas SS uses Brown Brothers Harriman for settlement in the United States.
BNP Paribas SS had always intended to deploy its global custody platform throughout Asia, according to a statement from the custodian’s Asia-Pacific head, Jean-Marc Pasquet.
The global custody contract had in recent times only been getting renewed on a two-yearly basis.
"The transfer of services in-house is not reflective of the standard of services provided by Citi or any dissatisfaction by Citi towards BNP Paribas Securities Services. The transition will be defined in cooperation with our clients and Citi," Pasquet said. Meanwhile, BNP SS will be servicing Australian investors with John Paulson, the New York hedge fund manager who made a fortune from short positions against the credit crisis. The custodian has been appointed by Ashton Advisors (Australia) to provide custody and fund administration services for the launch of the Ashton-
Paulson range of funds in Australia on 1 May 2009.
Ashton will be the responsible entity and local distributor for a range of feeder funds to Paulson & Co. strategies.