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ABN Amro Mellon wins €115bn DEPFA brief

UK – State Street and the Bank of New York have lost out to ABN Amro Mellon in competition to win a €115bn custody and securities lending mandate awarded by the DEPFA Group headquartered in Dublin.

Nigel Thomas, director and principal consultant at advisers C&N Partnership told IPE that State Street, BoNY and ABN Amro Mellon had all made the shortlist.

He added that this was a new mandate - DEPFA previously held assets directly with local and international depositories – the majority held by international settlement and custody services provider Clearstream, which is also part of the Deutsche Börse Group.

Clearstream did not respond to questions from IPE.

According to a spokesperson from ABN Amro Mellon, this is the largest publicly announced mandate awarded to the custodian to date. The second largest is a €50bn brief awarded by ABP Investments in May 2001

In addition to the custody and securities lending mandate, ABN Amro Mellon will also provide administrative services for the functions undertaken in-house by DEPFA Bank, said a statement. This includes reverse repo transactions, custody of cover pool assets for asset-backed bonds and DEPFA’s own securities lending operation.

This also forms part of the €115bn brief, said the ABN Amro Mellon spokesperson.

According to C&N’s Thomas, this additional contract resulted in no changes or job losses at the Bank. “Not at all,” he told IPE. A DEPFA spokesperson could not be reached for comment.

There are no expressed contractual review dates, but the ABN Amro Mellon spokesperson told IPE that these typically occur three to five years after the start date.

The tender process started in October 2005. The shortlist was established around the middle of January, and the final decision was made at the end of February/beginning of March, said Thomas.

While DEPFA usually uses a range of consultants, C&N Partnership was the only adviser used in this tendering and selection process.

DEPFA Bank managing director of operations Barry Stoneham said: “We began our review for this mandate in mid-2005 and, from the outset, there was intensive competition between the global custody providers.”

Thomas added: “When analysing the criteria for the appointment of a custodian for DEPFA’s assets, the majority of custodians interviewed offered very similar services and cost structures.

“However, it was a different matter entirely when it came to the assessment of the custodians’ respective abilities to form a true ‘partner relationship’, rather than a traditional ‘client and supplier relationship’.”

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