Mellon plans Luxembourg fund administration arm

EUROPE - US custody giant Mellon is planning to set up a fund administration operation in Luxembourg.

Jack Klinck, chairman of Mellon Europe and executive director of Mellon Global Securities Services (GSS) International, told “This is a clear objective for us this year.”

“We view Luxembourg as a really important market in Europe, but it’s a market where we do not have an operation today. We really need to be in that market. It’s the heart and soul of the funds business in continental Europe.”

Mellon GSS already has an offshore fund administration operation in Dublin, which it set up in the mid 1990s. However, Klinck said that operations in Dublin and Luxembourg would complement rather than compete with each other.

“We think to be a European funds service provider, which is what we aspire to, we really need to be in both of the offshore markets. The clients that we service in the UK and in Dublin have asked us to go to Luxembourg.”

Mellon set up its Dublin fund administration business as a green field operation. However, Klinck said that Mellon would probably look for a local partner in Luxembourg: “We’ve been looking at different entry strategies into Luxembourg for some time, organic and non organic, and we think that a partnership route into Luxembourg is preferable.”

Separately, Mellon is bringing in-house the custody of securities held in the UK on behalf of its global custody client base. Klinck said the transition of 26 billion pounds (38 billion euros) from sub-custodian Clydesdale Bank would be completed by March 31.

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