When ANZ agreed to sell its custodian services business in Australia and New Zealand to United States bank JP Morgan last week, it signalled a refocus for the bank on core banking priorities in Australia, New Zealand and Asia.
It also meant there was only one Australian-owned custody business left in the country. National Australia Bank (NAB), the largest custodian in the market with nearly 10 per cent of the Australian Securities Exchange passing through its books, is the last man standing.
NAB asset servicing executive Leigh Watson said being part of a leading Australian bank gave the bank credibility.
"[Being] part of a large domestic institution like the NAB continues to give our clients confidence that we're on top of all the accounting, tax and regulatory rules critical to our role," Watson said.
Even before the ANZ sale there had been some discussion about custodians moving some of their key functions, such as unit pricing, offshore and how this might impact on the quality of the service.
Media Super administration and compliance general manager Michael Rooney expressed some concern earlier this year in an Investor Weekly roundtable about using the services of offshore custodians.
"I'd hate to see it go offshore. We've seen in India with call-centre information suddenly appearing all over the place, despite the fact there was contracts in place," Rooney said.
Despite having no problems with the concept of offshore itself, BNP Paribas Securities Services head of sales Stephen Tremelling said it was what was sent offshore that mattered.
"Our philosophy, particularly with superannuation funds with activities such as valuations and unit pricing, we want to keep that close because of the sensitivity of those functions," Tremelling said.
And as the only Australian-owned custodian, NAB said it still believed it was important to provide clients with access to the services of global custodian Bank of New York Mellon for offshore investments.
"This combination of being part of a leading domestic financial institution and having a partnership with the largest global custodian gives our clients the best of both worlds," Watson said.
"It's been important for us and our clients to ensure our domestic focus does not hinder innovation."
AustralianSuper investments senior manager Peter Curtis said the fund had custodians in every market in the world.
"There's a heck of a lot of stuff being done offshore already, but we're certainly going to make sure that it's being done and controlled in an appropriate manner," Curtis said.
For now, NAB has no plans to exit the local market and plans to extend its product range and make the most of the partnership with Bank of New York Mellon.
"Our NAB Group chief executive Cameron Clyne's commitment to our local market has been well publicised and our custody service is no different," Watson said.
The ANZ transaction was expected to be completed before 31 December and would be followed by the progressive transfer of businesses and staff in 2010, ANZ said.
