PFPC Trust Co., a unit of PNC Financial Services Group Inc., says it plans to make custody and securities lending the focus of its overall business strategy.
The Wilmington, Del., company announced Thursday that it had promoted Sam Sparhawk 4th to head its custody and securities lending businesses.
Mr. Sparhawk has worked for PNC since 1985. Most recently, he was a senior vice president, managing director of PFPC Trust and a senior manager of PFPC's custody services group.
He said he sees many growth opportunities for the company. "This is an exciting time for the securities processing industry," he said. "For PFPC in particular, we are excited to leverage off the foundation we have built."
During the past quarter PFPC Trust has increased its assets under custody by 5.1%, to $347 billion. In December, it announced it would provide custody services for FleetBoston Financial Corp.'s Galaxy Money Market Funds, which had $19 billion of assets under custody.
Mr. Sparhawk said PFPC is preparing to announce several other deals in the next couple of months.
"We fully intend to grow the custody business," he said. "Our strategy is to grow the business though new-client wins and by leveraging opportunities with our other products."
In April, PFPC sold its retirement services unit to Wachovia Corp. PFPC Retirement Services sold record keeping and other outsourcing services for 401(k) and other retirement plans. Analysts said the deal would let PFPC focus its resources on custody and securities lending.
Mr. Sparhawk said the custody business is in a state of flux as consolidation continues in the industry.
Jim Palermo, an executive at Mellon Financial Corp.'s asset servicing unit, said he sees potential for more consolidation. "There will be further consolidation but more likely among second- and third-tier providers or a handful of local providers around the country," he told analysts during a conference call Wednesday. "Among the top five or six custody providers, one may elect to downsize, but we are not anticipating that at this point in time."
Analysts said consolidation and acquisitions could let midsize players like PFPC gather market share.
"Large companies, pension plans, and corporations don't want to be bought and sold. They want to control where their assets are held," said Geoffrey Bobroff, an East Greenwich, R.I., analyst. "They tend to be skeptical about changes. They want to be able to control these changes."
Despite the trends toward acquisitions and consolidation, Mr. Sparhawk said, PFPC will focus on organic growth for now.
"We want to leverage the capabilities both in PFPC and in PNC and make smart decisions to grow this business," he said.
