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JPMorgan sets up custody middle office in Australia

Cherie Marriott
New premises in the city of Adelaide will act as the bank''s service hub for Asia-based asset management clients.
Global custodian JPMorgan has established a hub in Australia to service fund managers in the growing business of middle office outsourcing. JPMorgan inherited its existing Adelaide presence, including about 200 staff, when BT Asset Management outsourced its back and middle office operations to JPMorgan at the end of last year under a five-year contract.

Until now, JPMorgan has been servicing BT from BT's own premises and will continue to do so until December 2002 when it will relocate its business and its staff to a new building selected this week. From the new premises, JPMorgan plans to cater for the anticipated growth in outsourcing over the next five to 10 years.

"When we took over the BT account last year we knew that handling middle office operations for third parties would become a core business for us in Australia and around the region," says Laurence Bailey, head of JPMorgan's regional investor services division.

Bailey says the biggest opportunities currently exist in Australia where JP Morgan is speaking with five insurance companies and fund managers about outsourcing the trade execution aspect of their operations. He hopes to sign up at least one of these clients in the next six months. Over time he expects this fund services business to represent 50% of JPMorgan's Australian earnings.

One account likely up for grabs is that of the newly merged Invesco and County NatWest asset management business. Invesco used to outsource its middle office operations to Macquarie Bank, which has recently exited the business, while County NatWest's account is with National Australia Bank.

Bailey says the team in Adelaide will handle trade matching and pre-trade compliance, while a back-office team in Sydney will handle fund accounting, compliance reporting and performance measurement. He says JPMorgan has been given various tax incentives by the South Australian government to remain in Adelaide and that ultimately the bank could employ as many as 450 people in the city.