Mellon Financial Corp., Boston, with $2.2 trillion in custody assets, has won seven of 12 competitions for Deutsche clients since November, accounting for $70 billion in custody assets. Northern Trust Global Fund Services, Chicago, with $1.6 trillion in custody assets, has won six new clients from Deutsche, amounting to $27 billion.
Former Deutsche Bank clients that have switched to Mellon include the $10 billion Louisiana Teachers' Retirement System, Baton Rouge, and the $925 million Ludwig Institute for Cancer Research, New York. The $3 billion United Food & Commercial Workers International Union-Industry Pension Fund, Chicago, hired Bank of New York. Northern Trust gained as clients the $21 billion pension fund of Lockheed Martin Corp, Bethesda, Md., and Catholic Health East, Newtown Square, Pa., with $1.2 billion in assets.
Brendan Brosnan, investment officer at Louisiana Teachers, said the system decided to do a search because of the State Street-Deutsche deal. State Street and Bank of New York were finalists.
David Fey, treasurer at the Ludwig Institute, said a decision was made to change custodians after Deutsche sold its business. Mellon was selected for its technology and integrated platforms, which combine accounting, performance measurement and access to Russell/Mellon analytics, Mr. Fey said.
With the RFP pipeline filling up, the big banks are out in full force competing for the business, and that is resulting in price wars.
"Prices for these services have become very competitive," said J.P. Morgan's Mr. Revensbergen. "Everyone is giving their best deals, which is substantially improving the fee situation for clients. That, in turn, is putting more pressure on State Street, and you have to wonder what this deal will be worth to them in the end if they have to cut fees a lot."