Gap narrows between trustee banks
In its second year the R & M survey covering fiduciary services reveals that the gaps between the banks have narrowed as they focus on improving their areas of weakness. This has resulted in much jostling for position as Bank of New York takes the lead from last year’s winners HSBC. The two largest providers, RBS and J P Morgan, achieve scores so close together there’s barely room to stick a scalpel and the biggest improvement in the year was from Citigroup gaining 0.75 over its previous performance.
The survey covered a total of 24 different aspects of service ranging from compliance monitoring and scheme audits through to provision of regulatory and technical advice, relationship management and value for money. Scores were given out of a theoretical maximum of 7. R & M received 99 responses covering a total of £205 billion in assets with market coverage of just over 80%.
|Depository / Trustee Survey 2004 Bank (last years position)||2004||2003||Change|
|1||Bank of New York (2)||5.88||5.68||0.20|
|4||J P Morgan (5)||5.67||5.35||0.32|
|5||Royal Bank of Scotland (4)||5.66||5.47||0.19|
|6||State Street (6)||5.14||5.19||-0.05|
As a new feature this year respondents were asked to prioritise the importance to them of the various areas of service. The following table shows the results out of a possible maximum score of 8.
|Area of Service||Score|
|Regulatory / Technical Advice||6.82|
|Day to Day Compliance Monitoring||4.82|
|Breadth of Services / Overall Support||4.81|
|Compliance Monitoring Visits||4.19|
|Production / Review of Scheme docmentation||4.10|
Regulatory and Technical advice is the most important area to clients. The bank that scored highest in that area was Citigroup followed by HSBC, Bank of New York and The Royal Bank of Scotland (RBS). The second most important area was relationship management – BNY came top here followed very closely by JP Morgan, Citigroup and RBS.
Interestingly one of the areas of least importance was fees – perhaps because once a depositary / trustee is selected the relationship tends to run for a very long time and clients tend not to have more than one service provider therefore limiting the opportunities for comparison. Having said that there have been a number of changes this year with Clydesdale pulling out of the market, passing its business on to Bank of New York and with outsourcing deals such as the one between Gartmore and HSBC where the fiduciary side is moving as well.
Looking at the client profiles, most of the clients of the top two placed banks, BNY and HSBC, have assets of under £1 billion while the majority of clients at the other banks have larger assets under managements. Only four of BNY’s 17 respondents had assets over the £1 billion mark, 3 out of 15 for HSBC. The fact that responses are more favourable from smaller clients suggests that the bigger players are more critical and demanding of the service they receive. The average score for smaller clients was 5.70 compared to 5.51 for those over £1bn.
|2||Bank of New York||5.64|
|3||Royal Bank of Scotland||5.54|
|5||J P Morgan||5.20|
It seems that over the last 12 months banks have focused on their fiduciary services and as a result have improved their product delivery. Despite the reduction in number of service providers competition remains keen and new entrants to the market Mellon will ensure that continues to be the case.
R & M welcome feedback from managers on the results of this survey and are happy to discuss further if required.