Societe Generale Securities Services
It has been a busy month for Société Générale, with its securities services division winning four transfer agency mandates in as many weeks. Its Italian division signed three agreements: AllianceBernstein Sicav and AllianceBernstein FCP, Aberdeen Global and Aberdeen Global II funds, and Mantex Sicav, a Luxembourg-registered open-ended collective investment fund.
It has been a busy month for Société Générale, with its securities services division winning four transfer agency mandates in as many weeks. Its Italian division signed three agreements: AllianceBernstein Sicav and AllianceBernstein FCP, Aberdeen Global and Aberdeen Global II funds, and Mantex Sicav, a Luxembourg-registered open-ended collective investment fund.
In Luxembourg, Société Générale Securities Services (SGSS) was mandated by BankMuscat (SAOG), the flagship financial services provider in Oman, to provide its asset management division with fund administration, registrar and transfer agency, domiciliary and custody services.
The wins are no accident. In June 2011, SGSS announced that it would now provide clients with a single platform transfer agency solution for investment funds that are domiciled in Luxembourg or Ireland, and has been pushing hard ever since when it comes to transfer agency services.
SGSS has picked up four transfer agency mandates in as many weeks— what can you attribute this to?
Elaine Kiggins: New foreign management companies are attracted more and more by the Italian AUM market (UCITS) thanks to the strong growth in AUM that been invested in foreign vehicles during the last 10 years. The penetration of foreign management companies in the Italian market reached 65 percent of total AUM. SGSS, as leader of the Italian local transfer agency market, won 18 mandates in 2012 for UCITS that are promoted by 14 management companies, and it is planning to get the mandates for another 10 UCITS by the end of the year. The strength of SGSS is the high quality of its services, which are appreciated by the market (particularly by many placing agents that strongly recommend our services when needing to place a UCITS).
How would you describe the Italian transfer agency market?
The foreign funds Italian market is quite different from other European markets due to the CONSOB (Italian Securities and Exchange Commission) regulation that introduced the role of the investor relations manager (while the role of an Italian paying agent is no longer required by law, it is still offered to foreign UCITS in order to fully support their distribution).
The main duties of the Banca Corrispondente (which is the role of the paying agent and the role of the investor relations manager when they are considered together) are:
Payments intermediation, due to the participation of Italian investors to foreign UCITS (subscriptions, redemptions and dividends payments)
Administration of subscriptions, redemptions and switches that are disposed by investors
Sending of confirmation letters
Fiscal agent
Performance of corporate actions (shareholders meeting convening notice, proxy voting, dividends payments, funds mergers or liquidation, and so on)
Communication to shareholders/participants (sub-funds mergers, sub-fund investment policy changing, corporate events and so on).
What challenge does the convergence of traditional and alternative investments pose to transfer agency?
As the trend towards the convergence of traditional and alternative investments continues, for example, through the Alternative Investment Fund Managers Directive, transfer agents are facing opportunities, but also significant challenges in terms of both technology and investor servicing. Whereas traditionally administrators were using separate systems to support traditional and alternative investments, the most flexible and responsive administrators can support both from a single system. As we seek to grow our business, it is important for us to have a single common platform that can service our alternative clients and our existing traditional clients equally well. In terms of client service, teams need to be able to respond to the demands of non-intermediated clients that require greater transparency and extended reporting.
How would you describe client relationship models in transfer agency: as sales support, or as client service?
With multiple interfaces to asset managers, investors and distributors, the client relationship models in transfer agency are diverse and complex. The transfer agent is the fund’s interface with investors, services the fund’s manager in terms of projected and actual cash flow activity, and feeds the sales force with key sales analysis data. Providing extensive distribution data and reporting on trends allows us to support our clients’ sales activity. To this end, we have developed a web-based tool for Italian distribution that offers commercial reporting for sales managers. We plan to roll out this service to other locations. Whatever the client relationship model, delivering a consistently high level of service is key.
To what extent is outsourcing back on the agenda, and what will this mean for the industry?
With pressure on fees and costs for all actors, outsourcing is firmly back on the agenda. The costs of complying with increasing levels of regulation, combined with the demand for local servicing, mean that only by partnering with a service provider of sufficient strength and breadth of coverage can an asset manager deliver best-in-class service and benefit from economies of scale. For the industry, this will mean that not only will scale be important for service providers, but the breadth of local coverage, such as a presence in Asia, will be important too.
