GLOBAL - RBC Dexia Investor Services has been ranked best global custodian for the third year running in the annual R&M Survey, based on client satisfaction with service.

Mellon was among the most improved providers, up to second place from fifth in the previous year. Only Credit Suisse managed to improve its position more coming out as number six after having been ranked tenth in 2006.

Meanwhile Bank of New York lost one position and is now ranked as last of the thirteen surveyed providers, ex aequo with State Street.

Judging from comments made by respondents, which include investment managers, pension funds, charities and other financial institutions around the world, the joint Bank of New York Mellon business might have a rough time when it is ranked as a merged company next year.

"Through our clients we have contact with seven custodians and Mellon is by far the best. I hope Bank of New York does not mess with this process," one respondent said.

Richard Hogsflesh, R&M managing director, estimates that next year the combined score for BoNY Mellon will be "slightly higher than BoNY's this year and a lot lower than Mellon's.

"However, I think the client service experience that Mellon clients have will remain the same at that early stage in the merger. The real test will be what happens in the 2009 survey once they have really started to put the operations together. Will that have any significant impact on either of the client bases? Only time will tell," he told IPE.

Another problem might be size as this year the four largest custodians: JPMorgan, Citigroup, State Street and Bank of New York, "have the four lowest scores in the survey by a substantial margin," as R&M pointed out in the study.

Looking at respondents from Europe alone, HSBC Security Services came out as the top-ranking provider, followed by RBC Dexia, UBS and Mellon. Northern Trust and Bank of New York share last place.

However, among asset owners including pension funds, endowments and charities, Bank of New York improved from last rank in 2006 to number eight. RBC Dexia and Mellon were ranked top performers. State Street was ranked in last place after Société Générale which tumbled from third position.

For the 2007 survey more than 1,000 responses were collected worldwide.