State Street Investor Services has, following a Thomas Murray review, become the custodian for Rio Tinto’s staff pension schemes in every major territory – except Australia.
The mining giant’s pension schemes in Canada, the US and the UK, totaling $8 billion under management, will henceforth have their custody, fund accounting, securities lending and investments analytics needs met by State Street, from the Boston-based bank’s operations in London and Montreal.
However State Street will not be replacing the 10-year incumbent master custodian at Rio Tinto’s $2.3 billion Australian corporate fund, National Australia Bank Asset Servicing.
It is understood the Thomas Murray review, lead from Toronto by the consultant’s senior vice president for the Americas, Arti Sharma, advocated a single global solution for Rio Tinto’s various schemes. However a shift to State Street was vetoed by the miner’s Australian super board, which counts as an external director Sam Kavourakis, the well-known former head of National Mutual Funds Management.
The fund’s principal investment officer, Wayne Grant, confirmed NAB Asset Servicing remained master custodian but would not comment on the reasons for the decision.
State Street is a fairly recent re-entrant to the business of providing custody and related services to super funds in Australia. Having introduced master custody to Australian super funds in the 1980s, it sold the business to Commonwealth Bank in 2000 (which subsequently on-sold to NAB) but two years ago decided to address super funds again, on the basis that they had become more like funds managers in terms of the sophistication of their needs arounds unit pricing etc. It has since picked up NGS Super as a client.
Of the pension deal for Canada, the US and UK, Rio Tinto’s group adviser of pension investments Michael Wrobel said: “State Street’s ability to service our schemes in multiple domiciles through a single, global platform was an attractive option for us, whilst also allowing us to reduce costs across geographies.”
It is understood that State Street unseated Northern Trust at Rio Tinto’s UK pension scheme, while the Canadian and US incumbents could not be confirmed at presstime.