UK – Scottish Widows Investment Partnership says it is reviewing its five-year outsourcing contract with State Street.
SWIP was one of the first asset management firms to outsource its investment operations and the contract with the Boston-based bank is scheduled to end in September 2006, a SWIP spokeswoman said.
“We are conducting a full tender process,” she said, adding the move was a “prudent, normal” review of a contract.
State Street said in March 2002 that it had completed a £78bn (€115.8bn at current exchange rates) outsourcing project for SWIP.
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 based in London.
State Street were not immediately available to comment.
Meanwhile, a new report has found that outsourcing can improve listed asset managers’ share price.
Oxford Metrica found that outsourcing back and middle offices “adds over 10% to the shareholder value of European asset managers”. The rise was due to the market perceiving that executives had a grip on their business and its costs, said Oxford Metrica principal Deborah Pretty.
“It’s a lot to do with signaling,” she told a briefing, adding the extra share performance was not based on factors such as the outsourcing provider or whether the deal went smoothly.
The firm, which was commissioned by the Bank of New York, analysed 21 transactions involving $21trn in assets.