Several Institutional Trust and custody accounts changed hands over the summer, reflecting not only downward pressure on fees, but customers' demands for added functions like the ability to report in multiple currencies.
Many banks, including Citicorp, are revamping their trust accounting technology to deliver on-line information about institutional investors' accounts across currencies and time zones.
Observers say that despite lower fees, many contracts are being awarded not to the lowest bidder, but to banks with the most sophisticated technical abilities.
A case in point is the State of Florida, for 10 years one of Citicorp's largest customers. The state is moving its retirement fund to State Street Boston on Nov. 1.
A Florida official said the fund - which has $35.8 billion of assets that include state lottery and state debt issues - is being moved largely because State Street's ability to deliver on-line information in multiple currencies.
We've had a long and productive relationship with Citicorp, but on the whole we thought our interests would be better served by going to State Street," said Ash Williams Jr., executive director of the Florida State Board of Administration in Tallahassee.
"The main thing is the speed with which we'll get real-time global information on our portfolio," Mr. Williams said. "State Street has state-of-the-art systems technology."
2% of Investments Are Overseas
Mr. Williams said that the State of Florida only began investing overseas three years ago. Since then, the percentage of overseas assets has grown to 2% of the whole, and will be 3% by the end of the year.
Mr. Williams added that he expected to be able to streamline back-office functions because State Street's on-line delivery of information would reduce the need for rekeying information. "I can safely say that moving to someone like State Street will lessen the back-office load," Mr. Williams said.
The Bank of New York also won several smaller customers this summer, with a combination of attractive fees and multicurrency reporting.
"Bank of New York has the marketing philosophy that "Nobody beats our price," said Hal McIntyre, president of the Summit Group, a bank consulting firm based in New York.
Canadian Account Attracted
Trust General du Canada, with a $325 million in U.S. securities portfolio and a $110 million portfolio of global assets, is shifting its business from Boston Co. to Bank of New York.
Bank of New York will also act as a foreign exchange agent for securities-related foreign exchange transactions, and will provide multicurrency reporting. Bank of New York will set up a new arrangement for Trust General with EuroClear.
And Bank of New York was chosen by Idaho State General Fund and the Idaho Pooled Government Fund to act as custodian and to initiate a securities lending program. Assets for the funds are valued at about $750 million. The fund is being moved from Chase Manhattan Bank.
The Royal Borough of Kensington, U.K., also handed Bank of New York its $183 million portfolio.
