While the custody and investor services arms of the major global banks fared much better during the crisis than other parts of the industry – and other parts of their own organisations – they were not immune from the retrenchments, downsizing, cost cutting and reduced client activity which occurred throughout 2008 and into the early part of 2009. In Australia, ANZ exited custody, leaving NAB as the only Australian bank providing domestic custody and investor services, Westpac and Commonwealth having long ago done the same. Ironically, most custodians are more upbeat about their prospects this year than ever. Jane Perry, for instance, is more worried about future market volatility and the reaction from clients to another big downturn, if it were to occur, than any regulatory or other changes. The Australian and New Zealand chief executive of JP Morgan Investor Services, says: “There’s still some uncertainty.
We saw the outworkings of the crisis with Dubai. The economy is still fragile in some countries. But Australia,” she says, is “a fantastic place to be”. JP Morgan acquired the ANZ custody business late last year, giving them the probability of having 13 new clients with assets under administration of nearly $100 billion. Importantly, it also gives JP Morgan a domestic custody operation in New Zealand, where JP Morgan had previously outsourced to NAB. JP Morgan has also added about 180 former ANZ staff to its payroll and received positive reactions from Australian clients to its demonstrated commitment to the market. For years, it seems, custodians have been rumoured to be considering leaving the Australian market. And many have. It’s a low-margin business and the banks which own them are not noted for being soft about such activities. The companies which have exited Australian custody in the past 15 years are: BT (to JP Morgan), Perpetual (to RBC Dexia), AMP (to BNP Paribas), Westpac (to HSBC), Commonwealth (mostly to NAB) and ANZ.