BoNY eyes Asian hedge fund processing

Executives at the Bank of New York are fond of mentioning that it has had an Asian presence for nearly 50 years. But while BoNY is a leading player in servicing American depository receipt issuers, it has had a lower profile in terms of securities services in the region.

Bank execs say, however, that they have an ambitious schedule for growing BoNY's Asia business, with one focus this year on providing securities services and processing for Asia-strategy hedge funds.

"Our main focus now is our hedge fund servicing capability," says Alan Griffith, vice chairman in New York. Servicing hedge funds is in some ways less complicated, because clients usually do not require daily NAV calculations. But the nature of their investment instruments is more complex.

In addition to providing back-office and processing services, BoNY also owns Ivy Asset Management, a US-based provider of funds of hedge funds, which has recently begun moving processing for its $18 billion of assets to the bank.

The bank now services Asia-focused hedge funds from its offices in New York, San Francisco and Dublin, in part because that is where many of the clients' prime brokers and investors are.

It counts most Asian central banks and official institutions as custody clients, but is now marketing its cross-border capabilities to other large investors. The bank has recently chalked up a mandate in Taiwan, but its highest profile win to date has been Malaysia's Employees Pension Fund.

Although BoNY's strength is cross-border work, it is selectively laying roots in domestic markets. For example it has established an accounting function in Singapore to provide NAV calculations for insurance companies there.

From there, the bank is eager to build out capabilities in areas such as transfer agency and funds administration. It also has a broker/dealer unit in Sydney that provides services such as transition management and commission recapture for the Australian market.

"We're looking at similar things in each market," says Griffith. Over the past few years, BoNY has built a fund admin capability in Europe, and now wants to follow suit in Asia, including markets such as Taiwan, where the bank already supports insurance-linked products for GE Life.

Nonetheless, the focus remains on cross-border business, says Andrew Gordon, managing director and Hong Kong general manager. "Many funds in Asia are domiciled elsewhere, which plays to our global strengths."

And in the bank's traditional business - investor services to central banks - it is expecting that a recent strategic alliance with Wilshire Associates will provide it stronger performance attribution capabilities. "This will beef up our service in master custody," Griffith says, adding the new technology delivery platform will be introduced to Asia over the next six months.