Only one new player, Northern Trust, has set up shop in Australia from scratch. Perry says she visited New York late last year and the environment in Australia, by comparison to that in the US, was incredibly positive: “We’ve had a fantastic 2009. We’re very happy with the growth we’ve experienced and the clients we have. We’re also very happy to take on the ANZ business.” After suffering during 2008 from lower trading activity and government interventions such as the short-selling ban – either partial or full – in many countries, custodians are now being asked to provide more services as part of the increased focus on risk management by super funds and managers. Leigh Watson, the executive general manager of NAB’s asset servicing division, which remains the largest custodian operating in Australia, says there is a lot of activity by funds managers looking to outsource more functions, particularly around the middle office, as a way to improve efficiency and reduce costs. With the increased focus on risk management, custodians are also being asked for more and more timely information.

“It’s a tougher environment for our clients and they are seeking, as you’d expect, more service and putting more pressure on price. But we’ve also put a lot of effort into trying to save on costs and provide more value add, such as with tax savings for clients,” Watson says. “ Better controls and improved transparency around securities lending has meant more work for custodians along with the operations around collateral management. “There’s a definite uptick in demand although I wouldn’t say it was a rush just yet.” He believes that being the only Australian-owned custodian, as well as the biggest, are major positives in the marketplace. “A lot of people prefer to do business with a full-service Australian bank,” he says. “Being the only one is a definite advantage.” NAB partners with BNY Mellon, the world’s largest custodian, for its international business. NAB last year expanded its custody service offering with the addition of a passive currency overlay.

Northern Trust, which set up an office in Melbourne in 2007, after winning two of the biggest clients available in Australasia – NZ Super and the Future Fund – has also been expanding its staff and service offering. The firm received a banking licence late in 2008, which enables it to receive deposits and improve cash management functions. Paul Cutts, the Australia and New Zealand head, says that a lot of effort over the past two years has gone into establishing the infrastructure to service Australasian clients and consolidating the business. He expects strong growth this year in both superannuation and asset management segments, Cutts, who is also on the ACSA board, says. “Funds are looking to adapt their operating models to create improved scalability, efficiency and governance. That provides opportunities to expand our client base and to offer additional choice to institutional clients in this market,” he says.