New York
26 January 2017
Reporter: Stephanie Palmer

J.P. Morgan wins State Street’s $1 trillion custody gig

BlackRock has switched custodian for $1 trillion in client assets from State Street Bank and Trust Company to J.P. Morgan Corporate & Investment Bank.

J.P. Morgan expects to onboard the assets from State Street over the next two years.

Daniel Pinto, CEO of J.P. Morgan’s corporate and investment bank, said: “This historic deal expands our relationship with BlackRock and is a validation of the investments we’ve made and the resources we’ve added to the custody and fund services business.”

According to BlackRock, State Street will still be a “significant service provider for BlackRock”, retaining its exchange traded fund business, among other things.

Derek Stein, senior managing director and head of business operations and technology at BlackRock, suggested that the decision reflects a commitment to maximise economies of scale, and to offer cost savings to clients.

He said: “As a fiduciary for our clients, we continually look for ways to secure services at the lowest cost and highest quality available. The expansion of our custodial relationship with J.P. Morgan reflects its attractive value proposition for these services while still allowing BlackRock to maintain a diverse roster of fund service providers.”

The news comes as State Street released its Q4 2017 earnings on 25 January, noting a 1.4 percent dip in assets under custody and administration, compared to Q3 2017.

However, State Street’s assets under custody and administration was up 4.6 percent on Q4 in 2016. It also reported new asset servicing mandates of about $1.4 trillion in 2016, including $180 billion in Q4.

A State Street spokesperson commented: "BlackRock continues to be a valued and longstanding client of State Street with a more than two-decade long servicing relationship. We remain a significant service provider for BlackRock, and the transition will not be fully completed until 2018."

"As seen in our Earnings announcement, we continue to see strong client demand for our services."

The spokesperson added: "Many of our most significant client wins during the year were expansions of existing client relationships, which we see as a strong endorsement of the value we’re providing."

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