A heated contest among fund managers to handle the equity investments of the Norwegian state petroleum fund has seen Chase Manhattan emerge as global custodian with State Street and BGI handling the asset management.

The Norwegian government and the central bank, the Norges Bank - which is responsible for awarding the mandates - are now refusing to make further comment on what is one of the biggest prizes in the asset management and custody industry, after a report in the Financial Times. The fund is to switch 50% of its assets from foreign government debt to securities. It currently has Nkr14bn ($1.82bn) but this is expected to grow to Nkr570bn by 2002 as the government transfers more surplus oil revenues.

While no institution would confirm details, it is reported that State Street Bank & Trust and Barclays Global Investors have been selected as senior managers for global investments following a six month selection process. There are two other, as yet unknown, junior managers.

Chase Manhattan is reported to have beaten off stiff competition from Citibank for the custody mandate.

The Norwegian government first announced its intention to switch between 30 and 50% of the fund from foreign government debt to international equities last year.

Norges Bank asked asset managers to submit offers for the management of indexed portfolios, spreading investments over countries and companies to achieve to achieve a return reflecting movements in established indices. The bank also expressed a wish to keep costs low and minimise risks.