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The cost of uncertainty
If the number of mandate changes which have occurred since the second half of 2014 are to be taken as an indicator, NAB has paid a significant price for its 2014 ASX announcement.
The degree to which the changing dynamics of the superannuation industry have fuelled competition in the custody sector is reflected in the number of mandate changes which have occurred in recent months.
Many of those changes appear to have reflected the uncertainty which surrounded the future of NAB Asset Servicing, while others were clearly the product of funds choosing to review their arrangements.
However, the bottom line for NAB Asset Servicing is that within the space of seven months, it lost four clients to competitor custodians.
However, front and centre of the changes was the decision by Telstra Super to move away from NAB Asset Servicing and to announce in June that it was moving its mandate to J.P. Morgan.
No less significant was the announcement that NAB Asset Servicing had also lost its mandate to service Mercer’s superannuation and investment trusts in Australia and was being replaced by Northern Trust.
This followed on only shortly after the news that Victorian Funds Management Corporation had moved its custody and administration business from NAB Asset Servicing to State Street.
Similarly, in April, big academic industry fund, UniSuper, moved from NAB Asset Servicing to BNP Paribas – something which followed on from the French-based custodian winning First Super from NAB Asset Servicing in March.
Importantly, BNP Paribas also picked up the TWU Super custody mandate from NAB Asset Servicing in December.
More recently, there was the announcement that WA Super had appointed J.P. Morgan as its administrator, after having been largely self-administered before that.
The graph on the right, generated by the Australian Custodial Services Association, reveals the state of play as at 31 December, last year. The mandate changes which have occurred since then will have resulted in NAB Asset Servicing having lost some of its market share.
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