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Railpen/JP Morgan custody relationship hits the buffers

The Railways Pension Trustee Company, which runs the £17bn (€25bn) industry-wide pension scheme for the UK railways, has axed JP Morgan as a global custodian in favour of ABN Amro Mellon.
It has retained the Bank of New York - opting to continue with its two-custodian model.
“Following a detailed tender exercise carried out by Railpen Investments on behalf of RPTCL, the trustee has made the new appointment of AAM as the second of our global custodians,” said Railpen Investments’ finance director Frank Johnson.
“In addition the trustee has reappointed BNY. We chose to continue with our two-custodian model as this has proved a successful strategy and is part of our risk mitigation in relation to asset safety.” A Railpen spokeswoman confirmed that JP Morgan had been replaced. A JP Morgan spokeswoman declined to comment.
“Our approach to the selection process was to assess our needs against the capabilities of the major providers in what is an extremely competitive market,” Johnson added. “We last carried out a tender exercise six years ago and there have been many changes in the custody market in that time.
“Key differentiators between providers included core and value added services as well as financial standing, pricing, contractual arrangements and the quality of service. The review drew on the expertise of many people within Railpen Investments.”
Railpen’s 20 external fund managers will work closely with the two appointed custodians, Railpen stressed.
“We are pleased to be continuing our relationship with BNY,” Johnson added. “Their service performance has been entirely satisfactory over many years and is supported by strong and effective relationship management.”
Railpen chief executive Chris Hitchen said: “These appointments are announced following a rigorous tender process through which Railpen Investments has achieved improved commercial and contractual terms from both the incumbent being reappointed (BNY) and the new custodian (AAM) compared to the existing terms.
“As the pensions industry faces ever increasing challenges, the role of the global custodian is of vital importance. I am confident that our dual custodian model will ensure ongoing asset safety and represents value for money for our members.”

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