Gap widens between top and bottom performers in trustee and depositary services

JP Morgan, HSBC, State Street and Citi are the top performers in the 2010 survey of UK trustee/depositary services conducted by R&M Consultants.

The research reveals a distinct gap in terms of client service between the top four providers and the bottom two, RBS and BNY Mellon, both of whom have seen their scores decline.

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 £100 billion of unauthorised funds. It is followed by JPM and Citi with 18% and 16% respectively. The other three players share the remaining 25%.

However the report suggests this might change as things are very active in this traditionally conservative market with recent senior personnel moves from RBS to BNY Mellon and significant asset moves from JPM to Citi as Standard Life shifted its business.

'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,’ said Richard Hogsflesh, managing director R&M Consultants.

These revolve around whether RBS will hold on to their seemingly loyal client base, how well the RBS argument that independence is best will stand up and whether managers will prefer to place their business with one bank, he suggested.

The survey also 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.