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2010 UK Unit Trust Trustee / OEICS Depositary Survey results

JP Morgan Tops R&M 2010 UK Trustee/Depositary Survey

The 2010 survey of UK trustee/depositary services conducted by R&M Consultants shows a distinct gap in terms of client service between the top four providers and the remaining two. Top honours go to JP Morgan for the first time, with a clear lead over rivals HSBC, State Street and Citi – all of whom have scores very close to each other.

There is then a clear divide between the leading providers and the bottom two – RBS and BNY Mellon, both of whom have seen their scores decline.

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The market is not only divided by service levels, it is also divided by size of operation. RBS has traditionally been the largest supplier and continues to have a 40% market share by value (although this does include about £100bn of unauthorised funds), followed then by JPM and Citi with 18% and 16% respectively. The other three players share the remaining 25%.

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However all this might change. Things are very active in this traditionally conservative market with recent senior personnel moves from RBS to BNY Mellon (Peter Craft and Grant Chambers) and significant asset moves from JPM to Citi as Standard Life shifted its business.

Richard Hogsflesh, Managing Director R&M Consultants, commenting on the survey results said: “The key question for 2011 is whether an upset such as the loss of key personnel, coupled with the relentless move towards outsourcing more functions to providers may well be the catalyst needed to change the face of the market. Will RBS hold on to their seemingly loyal client base? How well will the RBS argument stand up, that independence is best? Or would managers rather place their business with one bank? It seems rational to keep one set of records only and benefit from the economies of scale big banks offer. “

The survey reveals that most clients believe the depositary can be part of the same banking group as the custodian / fund accountant. Most of those who indicated that they preferred independence were RBS clients - but not all of them saw this as being essential. “Personally I believe that independence is the safest option but would not be totally against the functions being in the same financial group as long as appropriate controls were in place to ensure total segregation of functions,” was the verdict of one.

The £1bn club also show JPM taking first place with a significant increase in score. Another table that reveals how the top trustees are developing their services, keeping abreast of developments whilst others appear to have stayed still.

However all this might change. Things are very active in this traditionally conservative market with recent senior personnel moves from RBS to BNY Mellon (Peter Craft and Grant Chambers) and significant asset moves from JPM to Citi as Standard Life shifted its business.

Richard Hogsflesh, Managing Director R&M Consultants, commenting on the survey results said: “The key question for 2011 is whether an upset such as the loss of key personnel, coupled with the relentless move towards outsourcing more functions to providers may well be the catalyst needed to change the face of the market. Will RBS hold on to their seemingly loyal client base? How well will the RBS argument stand up, that independence is best? Or would managers rather place their business with one bank? It seems rational to keep one set of records only and benefit from the economies of scale big banks offer. “

The survey reveals that most clients believe the depositary can be part of the same banking group as the custodian / fund accountant. Most of those who indicated that they preferred independence were RBS clients - but not all of them saw this as being essential. “Personally I believe that independence is the safest option but would not be totally against the functions being in the same financial group as long as appropriate controls were in place to ensure total segregation of functions,” was the verdict of one. 

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The £1bn club also show JPM taking first place with a significant increase in score. Another table that reveals how the top trustees are developing their services, keeping abreast of developments whilst others appear to have stayed still.

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