One week after becoming custodian to the $1.3-billion AvSuper, BNP Paribas is competing to keep two superannuation fund mandates totalling more than $5 billion.
The $4.5-billion Australian Catholic Superannuation Retirement Fund (ACSRF), BNP Paribas’ second largest super fund client, and the $580-million Health Industry Plan (HIP) are assessing bids from custodians wanting to manage their investment operation contracts. This follows BNP Paribas’ clinching of the $1.3-billion AvSuper mandate from National Australia Bank (NAB), which is Australia’s largest custodian with $506.5 billion in client assets.
BNP Paribas is competing against NAB, JP Morgan and State Street to retain the ACSRF the contract, which was tendered in March and is due to be completed in late June. The four custodians were shortlisted from a field of 14 by ACSRF executives and Marian Azer, senior consultant at Mercer Sentinel, as reported in Investment Magazine Online on Tuesday 24 April.
Health Industry Plan invited most custodians to bid for its investment operations contract three weeks ago. The fund’s risk management committee will work with Jo Leaper, a Melbourne-based consultant with JANA Investment Advisers, to choose a custodian whose services best suit the small fund’s needs by July.
BNP Paribas has been ACSRF’s custodian since 2002 and maintained its incumbency in a 2007 tender. It won HIP’s custody mandate in the same year. Both funds are reviewing their contracts under routine due diligence requirements set by the Australian Prudential Regulation Authority.
“We want clients to work with us not because they have a history with us, but because they’ve made a choice to be with us,” says Pierre Jond, managing director of BNP Paribas Securities Services in Australia and New Zealand. “They have to test the market and be confident in their choice.”
Burwood, Sydney-based ACSRF seeks a custodian that can be trusted to perform basic tasks and use advanced technology, says chief executive officer Greg Cantor. Health Industry Plan wants custodial services that suit the small fund’s investments, says Ross Bernays, chief executive officer of the Haymarket, Sydney-based fund.
The ACSRF and HIP searches are the latest in a series of custody tenders since 2010, which saw the $20-billion REST Industry Super, $24-billion Commonwealth Superannuation Corporation, $19-billion Sunsuper and $32-billion QSuper break from incumbents.
BNP Paribas stands to lose its largest super fund client, the $4.6-billion AGEST Super, now that the fund can complete its merger with the $43-billion AustralianSuper after gaining government exemption preventing $45 million in investment losses from being realised. AustralianSuper is a client of JP Morgan.