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2006 UK Trustee / Depositary Survey Results

HSBC has returned to the top of the UK trustee and depositary services table, according to the 2006 survey results from R&M Consultants, replacing Citigroup.

“We are in the fortunate position of dealing with a number of Trustees / Depositaries and as such can identify the strength and weakness of each.  In many ways HSBC leads the way in service and delivery of assistance.  Their all round offering is probably the best in the market at the moment,” was the verdict of one client.

The survey shows a big increase in scores for most of the banks participating in this annual survey, with the overall average score improving by a huge 0.36 from 5.67 to 6.03..

Both RBS and State Street saw significant increases in their scores, gaining 0.65 and 0.68 points respectively. This means that RBS has leapfrogged ahead of the other major player in terms of size, J P Morgan. These two banks dominate approximately 80% of the market.

 Depository / Trustee Survey 2006 Bank (last years position)20052006Change
1 HSBC (2) 6.02 6.41 0.39
2 Citigroup (1) 6.04 6.25 0.21
3 The Bank of New York (4) 5.64 6.08 0.44
4 The Royal Bank of Scotland (5) 5.41 6.06 0.65
5 J P Morgan (3) 5.84 5.82 0.02
6 State Street (6) 4.98 5.66 0.88
  Overall Average 5.67 6.03 0.36

Richard Hogsflesh, managing director of R&M Consultants, commenting on the results said;t is difficult to fully explain why there has been such a big increase in levels of client satisfaction (37% of respondents indicated that they had seen an improvement in service). There are probably a couple of contributory factors. Firstly, the introduction of this survey four years ago has brought service quality into greater focus. It has enabled banks and clients to make comparisons between the service providers – something previously difficult to do as few clients had experience of more than one provider. This in turn has grabbed the attention of the banks and allowed them to identify areas for improvement. They all take this survey seriously and are keen to do well.

“Secondly the market is perhaps more settled now than it has been for a while. OEIC conversions, where chosen, have largely been completed; stock market values have been rising (always guaranteed to make fund managers more affable) and the introduction of MIFID has not yet had its full impact on the industry. A period of stability has allowed the banks to concentrate on delivering a quality service and developing their capabilities to meet the future requirements of their clients.”

Trustee ImprovedDeclinedStayed the same
The Bank of New York 2 0 11
Citigroup 7 0 2
HSBC Securities Services 9 0 5
J.P.Morgan 4 0 8
The Royal Bank of Scotland 11 2 14
State Street 1 0 14
Total 34 2 54

There are a number of observations to make about individual results. Both State Street and Bank of New York, despite receiving a big improvement in scores, have a low percentage of respondents who feel the service has actually improved year on year. HSBC and Citigroup on the other hand have a much higher percentage. J P Morgan also has a reasonable number who feel the service has improved (33%) and none who said it had declined, yet their overall score went down by 0.02, despite the questionnaire having little change from last year and scoring system being identical. Where JPM appear to fall down is on regulatory / technical advice which is below the industry average in terms of scores. This is one of two key areas for most clients, where HSBC and RBS score very well, the other being ongoing development of services such as online reconciliations where HSBC, Citigroup and JP Morgan come out on top.

Bank of New York scores well on regulatory / technical advice except for that provided on new products. It is also relatively weak on ongoing development of services and reporting of compliance monitoring visits, strong on day to day compliance monitoring.

State Street, although notching up a significant improvement in score, still has areas for improvement, notably pricing checks, compliance monitoring and relationship management.

Royal Bank of Scotland, like State Street, made a considerable gain overall and are strong in most areas, particularly advice on new products, but were relatively weak on day to day compliance monitoring. Citigroup, having been nudged into second place, showed particular strengths in the quality of guidance & direction from relationship managers.

Overall the results are good news for fund managers demonstrating a big improvement in service levels from all suppliers. The bar has been raised.
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