Northern Trust Co., a securities custodian and trustee with some $520 billion in assets under administration, has obtained a license from the Hong Kong Securities and Futures Commission to set up a subsidiary for securities lending.
"This gives us 24-hour securities lending coverage," said Robert Lapinski, vice president of corporate and institutional services marketing at the unit of Chicago-based Northern Trust Corp.
Securities lending involves using customer assets to earn extra income from lending securities to broker-dealers and other financial institutions for market making, hedging or arbitrage.
A major provider of master trust, global custody, and investment management services to institutional clients, Northern Trust began securities lending in 1981. The bank has since steadily expanded its network of subcustodians to 60 countries around the world. It provides securities lending to 31 markets from its Chicago offices and a branch in London.
Asia's fast-growing markets are proving increasingly irresistible to U.S. banks, many of which hope to use Hong Kong as a gateway to China.
On Friday, NBD Bank, the main operating unit of NBD Bancorp said it had obtained a branch license in Hong Kong to handle trade finance, commercial lending, and deposit taking.
Since last year, First Union Corp. has set up a joint venture with Hongkong Chinese Bank Ltd. and the Jakarta, Indonesia-based Lippo Group, and Minneapolis' First Bank System Inc. has opened a Hong Kong trade service company. In addition, Bank of Boston Corp., which recently opened an office in Beijing, said last week that it was considering opening other offices in Asia.
Northern Trust's Hong Kong-based unit, Northern Global Financial Services Ltd., will start out with a staff of five and will expand as needed. The bank has transferred Richard B. Bentsen from London to take over as managing director.
Mr. Bentsen noted that securities lending is growing rapidly in Hong Kong and other Asian securities markets. He said that having a physical presence in Asia will enable the bank to build relationships with borrowers in Hong Kong, Tokyo, and other Asian financial centers, such as Australia and Singapore.