JPMorgan Chase & Co. announced a reorganization Monday that would underline its position as one of the biggest players in custody services, with a combined $9.1 trillion of assets under custody.
The New York banking company said it has combined its investor and issuer services businesses under the name JPMorgan Worldwide Securities Services. The integrated business unit brings together JPMorgan's investor services and institutional trust services, the company said, to provide custody and investor services as well as securities clearance and trust services.
Michael Clark, the head of the new unit, said the parent company decided to combine the businesses now in order to streamline operations and provide better services.
"We took a holistic view" in combining the businesses, he said. Morgan has roughly 950 clients on the custody side of the business and 500 on the institutional side, he said, adding, "There are 40 products between the two groups," including global custody, fund services, outsourcing, collateral management, and asset servicing.
JP Morgan Worldwide Securities will enhance its alternative investment capabilities, Mr. Clark said. "For us, we have had a number of clients that have been investing and processing in that space," he said. Many clients have alternative investments, he said, including funds of funds and derivatives, and his unit wants to be a significant player in this business.
With $9.1 trillion under custody, Morgan is a significant player in the industry. "We are passionate and committed to be the player in the securities processing arena," Mr. Clark said. "This move supports that concept."
Other major players include Chicago-based Northern Trust Corp., which had $2.6 trillion of assets under administration at the end of 2004; Boston-based State Street Corp., with $9.5 trillion of assets under custody; and Bank of New York Co., with $9.7 trillion.
Asked about his competition, Mr. Clark said, "There is the list of usual suspects, but with 40 products, we can compete with outsourcers, global custodians, hedge fund administrators. We see some competitors a lot, but no one that pops up everywhere."
The integration of former Bank One businesses did not play a significant role in this business decision, said Mr. Clark. "It was a key consideration, but it wasn't a driving factor," he said. The Bank One purchase closed in July.
The two businesses being combined generate more than $3 billion of revenue a year and service $6.7 trillion of debt and $250 billion of equities worldwide, the company said.
JPMorgan Investor Services generated 16% revenue growth last year, achieved record revenue, and reported a 20% increase in assets under custody for institutional investors worldwide.
Mr. Clark said he expects this growth to continue, but he declined to state goals.
JPMorgan Institutional Trust Services also expanded its business by adding products and distribution channels and extending its client base.
The company's treasury and securities services arm is its global transaction processing and information services business.
The worldwide securities services unit operates through four business units: securities, including global custody, fund services, and outsourcing; clearance, including American depository receipts, clearance and collateral management, securities collateral management, and government and equity services; securities lending and market products; and trust, including global debt and asset servicing.
