22 March 2017
Melbourne
Reporter: Drew Nicol

Northern Trust retains Australian pension fund custody mandate


Northern Trust has received a renewed endorsement from the Australian government employee and Australian Defence Force pension fund to perform custody and related investment administration services, including securities lending.

The pension fund, known as the Commonwealth Superannuation Corporation (CSC), represents AUS 40 billion (USD 30.6 billion) of assets and has retained Northern Trust as its primary asset manager and supplier of capital market services since 2011.

CSC manages 11 superannuation schemes and provides superannuation services.

The renewed mandate marks the latest push by Northern Trust into the Australian market after it established a second Australian office in Sydney. The bank also acquired institutional equity brokerage Aviate Global in 2016.

Madeleine Senior, managing director of Northern Trust for Australia and New Zealand, said: “At Northern Trust, we work in partnership with all our clients to deliver the highest quality solutions to the ever-evolving requirements and challenges they are facing. Our global custody platform ensures our client’s assets are well protected and our superannuation fund clients are positioned to meet the changing political, economic and regulatory challenges.”

“Equally, as our Australian superannuation fund clients grow their relationships with us we have expanded our capital markets service offering to include securities lending, foreign exchange capabilities and brokerage. CSC values Northern Trust’s flexible and scalable global investor services and we are delighted to have the opportunity to extend our long and rewarding relationship together.”

CSC CEO Peter Carrigy-Ryan added: “CSC regards its relationship with its custodian as a strategic business relationship, and following a full market review, we are proud to continue our relationship with Northern Trust.”

“Over the past five years, we have worked closely to ensure we collectively raise the bar for global best practice in investment operations.This endorsement supports CSC’s strategic investment operational goals of automation, efficiency, robustness and transparency.’

Commenting on the growth of Australia’s securities lending market ahead of the Pan Asian Securities Lending Conference/Risk Management Conference in Seoul in March, Natalie Floate of BNP Paribas, said: “In Australia, we are seeing a change in approach and appetite for securities financing products from superannuation funds. This has been driven by the general return to focusing on fund performance after several years in which the agenda has been dominated by risk management and regulatory change.”

The outstanding float of Australian commonwealth government bonds has risen from AUD 55 billion (USD 41.98 billion) in 2007 to AUD 460 billion (USD 351 billion) today and is set to increase to more than AUD 600 billion (USD 457.89 billion) in the coming years, according to Australia and New Zealand Banking Group.

Other securities, such as semi-government bonds, bank debt, supranational debt and corporate credit, have also grown, and the debt market is approximately AUD 1.4 trillion (USD 1.1 trillion) in size.

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