Laurence Bailey is a patient person. He first expressed interest in buying ANZ Custody, on behalf of the then Chase Manhattan Bank, about nine years ago. Last year he put in what would probably have been a winning bid only to see the ANZ business withdrawn from sale. Last week he was, at last, successful.
Bailey, the regional head for investor services for JP Morgan Chase, finally succeeded in buying the $100 billion of business in ANZ Bank’s custody division, probably for a lot less money than he was prepared to offer previously.
The deal gives JP Morgan a footprint in third-party domestic custody in Australia, a domestic custody operation in New Zealand and 13 extra master custody clients. It cements JP Morgan’s position as the only custodian which provides full service custody inhouse – none of the others does domestic, global and master custody.
And, as an extra bonus, Bailey will get to flick long-time rival National Australia Bank, which is its current domestic custodian in New Zealand.
It is expected that JP Morgan will appoint itself – the former ANZ New Zealand custody operation – to also provide for the first time a full-service operation across the Tasman.
The deal is not all roses, however. The major ANZ client, ClearStream, which has about $40 billion with ANZ in sub-custody, has put its Australian settlement and safekeeping up for tender. But JP Morgan is probably now in a better position to win this tender than it would otherwise have been.
ANZ this year also lost the Future Fund’s part of the domestic custody of Northern Trust. With JP Morgan, a direct international competitor, overseeing the other Northern Trust domestic custody business in Australia, it is considered likely that the business will go to a third party.
And the backoffice outsourcing of ING’s wealth management business, being acquired by ANZ, is a separate deal from the ANZ Custody arrangement (contrary to the report in last week’s I&T News).
ING is being advised by Mercer Sentinel on its backoffice outsourcing, currently split between numerous providers, and it is understood that a recommendation is due to go to the client this week. A sign of the independence of the two deals is that Mercer Sentinel rejected ANZ Custody’s bid in the first round.
However, ANZ bank sources said that it made sense for JP Morgan to take over the ING business too, as long as it satisfied all the funds manager’s criteria.