Northern Trust Global Investment Services plans to expand its asset servicing, asset management, and wealth management businesses internationally in an effort to generate assets under management.
Stephen Potter, the head of Northern Trust's international market segment, said the company plans to expand in markets such as Germany, Switzerland, the Netherlands, and the Nordic region. He said he plans to consider establishing regional offices and making strategic acquisitions in order to expand.
"We can't do all of this at once," he said. "We are looking for a systematic schedule and likely will enter a new market or two annually."
Northern Trust has established strong books of business in the Netherlands and the Nordic region, Mr. Potter said. In Germany, it has a joint venture formed with Heleba in 2001.
He said the Chicago banking company also plans to develop its fund accounting and hedge fund administration services in Europe.
"We have a small business that we built organically, but we would like to complement that with something that gives us more scale," he said. "We want to logically extend into continental Europe with a physical presence that is timely."
Mr. Potter said that, in the past year, Northern Trust has reviewed its businesses and designated the international segment as a key area for growth.
"We are in the right place," Mr. Potter said. "The demographics continue to demand the service we deliver."
Analysts said strong growth potential exists in Europe but that many U.S. banking companies have decided to focus domestically because of difficult market conditions.
"To succeed, banks have to be willing to take a chance in global markets," said Kevin Daniels, a Boston analyst. "There are areas in Europe and Asia that are still underserved. They are ripe for banks willing to spend and hire strategically."
Northern Trust, a multibank holding company, has a growing network of offices in 15 U.S. states and has offices in six countries, including England, Italy, France, and Germany. At June 30, it had $2.3 trillion of assets under administration and $527 billion of assets under investment management. Its international market segment has $850 billion of assets under administration and $22 billion of assets under management.
Mr. Potter said the international business has become increasingly important in the company during the last five years, generating 30% of the revenue from asset management and administration. He said the growth has mostly been organic but that the company is willing to continue strategic acquisitions in order to enter new markets and add capabilities.
The segment has been expanding since Northern Trust established it de novo in London in 1997. In May, Northern announced it had opened its first office in Japan and was awarded $8 billion of mandates from Japanese clients, including the Government Pension Investment Fund.
Mr. Potter said the company hopes to expand further in Asia, particularly in China. Northern made its first Asian alliance in 2001 through an agreement with Japan's Mitsubishi Trust to sell Northern Trust investment products.
He said he hopes to establish a presence in mainland China.
To go after more global assets, Northern on Thursday named Wilson Leech a senior vice president in a newly created post, head of international strategic planning. Mr. Leech, who will be based in London, was head of wealth management services at State Street Corp. and previously was a chief financial officer at RBS Trust Bank.
Mr. Leech said in a press release that part of the reason he joined Northern Trust was its focus on market expansion by attracting, developing, and promoting local talent.
Mr. Potter said Northern's expansion beyond North America will include entering new markets, analyzing potential acquisitions, and back-office outsourcing,
"Wilson has extensive expertise in market evaluation, and he has a wealth of experience in global fund services," Mr. Potter said. "Given his expertise and experience and competitive perspective, he will be critical in helping to execute the strategy."
