LaSalle Bank launched a global fund services business to expand its global structured financial services business and enter the alternative investment market.
The Chicago unit of ABN Amro Holding NV already offered fund accounting, investor servicing, and securities custody technologies for financial services firms. Adding alternative investment services builds on those lines, said Jim Jendra, a senior vice president at LaSalle and the head of its global fund services business.
"We have found that there is a lot of demand for these services from our existing customer base alone," Mr. Jendra said.
LaSalle, which has $72.9 billion of assets and $43.7 billion of deposits, hopes to use its parent's international operations to expand in Europe and to enter Asia, he said. Starting this year it will offer fund administrative services in Europe, through ABN Amro's network there, and in Asia.
"We have a team in Dublin to help us serve the European market with alternative investments, and that team can leverage some of the things in our London office in terms of trustees' services," Mr. Jendra said. "Later this year, in the third of fourth quarter, we'll expand into Asia. We'll assess the market over there over the coming months and determine how best to service that market."
LaSalle will service the Asian market initially from the offices in London and Dublin, but it may add a sales representative in Asia in the future, he said. "We want to consider how large a presence we can develop in Asia, and then we'll grow from there."
Analysts said that even though the fund servicing market is crowded, a bank that can enhance its offerings by servicing alternative investment products like hedge funds can stand out.
"There are a lot of companies in the market that are offering traditional fund servicing, but someone has to step beyond that and look down market at products that are underserviced, and not just alternatives, but structured products, as well," said Burton Greenwald, a Philadelphia analyst.
Paul Jessup, a senior vice president at LaSalle and the global business manager for its fund services business, said ABN Amro's international operations and LaSalle's strong brand recognition among companies that offer collateralized debt obligations and commercial mortgage-backed securities, where it already has a strong market share, give it an advantage.
Mr. Jendra said that as the leading global commercial mortgage backed securities trustee and the second-largest provider of collateralized debt obligation trustee services, after JPMorgan Chase & Co., LaSalle is a market leader in the structured products and securitization industry.
Its global securities and trust services business has more than $1.1 trillion of assets.
Mr. Jessup said this base allowed the fund services business to open last week with $6 billion of assets under administration. He expects to "grab significant market share from here."
Analysts said LaSalle will face stiff competition in the fund services market from prime brokers, third-party fund administrators, and traditional trust banks like Northern Trust Corp. of Chicago and State Street Corp. of Boston.
In January, State Street announced an agreement to buy Currenex Inc. for $564 million in cash to improve its services offered for hedge funds and other alternative investments.
Mr. Jendra said LaSalle's strong operations in niche markets focused on collateralized debt obligations and commercial mortgage-backed securities gives the new unit an opportunity to compete with State Street and Northern Trust.
"We know that the broader market is providing fund services, but they don't have the niche experience in the credit sector. To be honest, few firms do," he said. "Most firms veer away from structured products, because of their complex nature."
Mr. Jessup said: "There is a tremendous demand for these services already from our relationship in the commercial mortgage-backed securities and collateralized debt obligation side. By opening this business unit, we are opening ourselves up to asset managers and fund companies, and we expect to reap a lot of initial business from firms that are looking beyond their product offering and into hedge funds, hedge fund of funds, and private equity."
The new unit's core offerings include fund accounting, fund servicing, custody, and cash management services. Mr. Jendra said LaSalle will look to expand those offerings.
"We are looking within our organization to see the resources we have here and with ABN Amro to determine what else we can offer," he said.
Mr. Jessup said future offerings may include additional credit services and foreign exchange services.
