The Australian Catholic Superannuation Retirement Fund (ACSRF) is weighing bids from four custodian banks seeking to manage its $4.5 billion investment operations contract.
Incumbent custodian BNP Paribas is competing against National Australia Bank (NAB), JP Morgan and State Street for the contract, which was tendered in March and is due to be completed in late June. Mercer Sentinel, an investment operations consultancy, was hired to help ACSRF assess custodians in February. The four custodians were chosen from a field of 14.
ACSRF executives and Marian Azer, senior consultant at Mercer Sentinel, will work with the fund’s audit committee to shortlist one or two custodians and visit the businesses on site. One or both custodians will then deliver final pitches to the fund’s board on June 28.
“We’ve got an open mind,” says Greg Cantor, chief executive officer of the Burwood, Sydney-based industry fund. “Custodians need to do all of the basic tasks, especially unit pricing, and move forward with technology. The custody business never stands still.”
BNP Paribas has been the fund’s custodian since 2002, when the French bank bought Cogent, the fund administration business of AMP Financial Services that provided custodial services to ACSRF. BNP Paribas later retained the custody contract, its second largest in Australia after the $4.6 billion AGEST Super, in a 2007 tender.
The ACSRF search is the latest in a series of tenders since 2010, which has seen $20-billion REST Industry Super, $24-billion Commonwealth Superannuation Corporation and $19-billion Sunsuper split with incumbents. In March, the $32-billion QSuper terminated its custody contract with NAB in favour of State Street. Last week, the $1.3-billion AvSuper chose BNP Paribas over NAB.
Superannuation funds are required by the prudential regulator to review their contracts with outsourced custodians every three or five years.