State Street Group has announced the completion of a £78bn (e127bn) outsourcing project for Scottish Widows Investment Partnership (SWIP), part of the Lloyds TSB Group. In October 2000, SWIP appointed State Street to provide custody, trustee and administrative services for its entire range of life, pensions and investment products.
Under the deal, State Street agreed to integrate the investment administration functions of SWIP’s four component businesses – Lloyds TSB Life, Pensions and Investments, based in Andover, Scottish Widows, based in Edinburgh, Abbey Life in Bournemouth and the former Hill Samuel Asset Management in London.
Now the operation is complete, SWIP’s middle office operations are executed from one site in Edinburgh as opposed to various sites across the UK.
Bill Main, chief executive of SWIP in Edinburgh, says the integration has produced significant strategic benefits.
“We’ve been able to move from a fixed base cost structure to a variable cost structure ahead of schedule, and are now able to focus our full resources on managing money,” he says. Integrating the four systems included over 800 funds with combined assets under administration of £78bn.
Custodians have typically concentrated on lower margin outsourcing services such as trade settlement but are increasingly targeting fund managers’ middle office operations which include execution and settlement instruction.
The announcement comes on the heels of other large outsourcing projects including the Bank of New York’s contract with JP Morgan Chase and State Street’s agreement with US investment manager PIMCO.

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