EUROPE - Insight Investment is to outsource its middle and back office investment operations to Northern Trust - with up to 90 staff transferring.

The two firms said they have begun "exclusive negotiations" on the deal, the terms of which were not disclosed. The deal involves all of Insight's assets under management except property, or around £70bn (E101.2bn).

"After our initial feasibility study it became clear that there was a sound and compelling case for moving to an outsource business model with clear benefits for Insight, our colleagues and our clients," said Insight's chief operating officer Atul Manek said.

"Given our conviction that our investment operations team is one of the best in the industry, it was important to retain that expertise and ensure the well-being of our colleagues."

An Insight spokeswoman said there was a competitive tender process involving "all the major players".

Insight will outsource a range of functions: trade matching, confirmation and settlement, investment record keeping and entitlement processing, pricing, asset set-up, reconciliation, client reporting, valuations and performance analysis.

The firms said it is expected that between 85-90 London-based Insight staff will transfer to Northern Trust, in London.

Manek added: "Key considerations for Insight included opportunities for increased technological and service benefits and the ability for increased management focus on our core proposition of investment performance and customer service."

"We are very excited about extending our services to Insight and adding this new dimension to what is already a successful relationship," said Stephen Potter, head of Northern Trust's international businesses.

"This appointment is an endorsement of our strategy and business model for the global fund manager segment and complements our recent success in the US outsourcing market."

Penelope Biggs, head of corporate and institutional services in Europe at Northern Trust, said the deal builds on a long-standing fund administration and custody arrangement with insight.

She said the deal was the "tip of the iceberg" as asset managers move to outsource investment operations. "There are quite a lot in the background," she said, but declined to be more specific.

Insight was advised on the selection of Northern Trust by consulting firm CSTIM. The agreement is expected to be completed in the second quarter of 2005.