Custody award surprises competitors
One appointment by the NTMA that caused some surprise in the market was that of ABN Amro Mellon to the position of fund custodian.
Observers had predicted that one of the larger custody players in Europe in terms of assets under custody might pick up the brief.
Certainly with IR£8bn in assets up for grabs, coupled with an estimated annual inflow of IR£1bn in assets until 2025, every custodian worth its salt was involved in the RFP.
With the NTMA precluded from having a custody shortlist under the tender rules, receipt of custody RFPs was followed by a visit to every firm that applied.
ABN Amro Mellon came up trumps, and Dean Handley, custody sales manager for UK and Ireland at the firm trumpets the importance of the win. “We were delighted to have won this mandate. There was a degree of surprise in the market, but not from us I must say! We felt we did a good presentation and dealt with all the issues that were raised.”
Handley says the selection process was of the highest calibre, adding it was up to the custodian to shine. “As the last custodian to be seen we had the opportunity to make a lasting impression and we went for it.”
He notes how rigorous the agenda for this meeting with the NTMA was. “We were allowed to make a presentation beforehand, but we were told which items we had to cover and this only lasted maybe around 15 minutes in a three and a half hour meeting. The rest of the time was taken up with responding to their specific enquiries.”
Handley recounts what he believes may have been the key issues for the NTMA in its selection of the custodian. “One aspect, I think, may have been the nature of the joint venture we have here, because the contract involves the capacities of both Mellon and ABN Amro.
“Another factor, I believe, was that they very much liked the operations side, and when the NTMA visited us they had the opportunity to ask questions of the people who would be directly involved in dealing with them in a live environment.
“Lastly, I think that our systems technology was in tune with their needs in terms of what we can deliver to their desktops which can then be utilised. Overall, I think we showed a willingness to work with the NTMA and the degree of flexibility that they were looking for.”
Following the appointment in January 2002, Handley says the firm entered into contractual negotiations with the NTMA before beginning operations around two and a half months later.
“The NTMA had notified all their appointments that they were chosen subject to contract, so this was a necessary process. The first stage involved the consultant making their comments on the contract, then the contract was passed to the NTMA’s internal lawyers and then to external lawyers. “The nature of the NTMA means they have to see that everything is done in a thorough manner.”
Within a week of starting operations, Handley says assets were already being moved to the fund’s transition manager, Morgan Stanley. “I have to say that it was a very quick and painless transition into a live environment.”
In terms of value-added services, the firm has a stock lending book up and running for the fund as well as providing fund accounting and various cash management initiatives.
Handley explains the significance of the NTMA win to the custodian. “The knock-on effect is that in approaching other European and corporate funds we can offer them a degree of confidence that we can handle this type of fund profile.
“Hopefully it is a good springboard to win future business. Having won the mandate is one thing, but the important thing though is to make sure they are a happy client and to build from there.”