Northern Trust to Grow Managed Accounts Abroad
August 23, 2004
Northern Trust Global Investment Services plans to expand its wealth management, asset servicing, asset management, fund accounting and hedge fund administration businesses internationally. 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, both by opening regional offices and making strategic acquisitions.
"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, Potter said. In Germany, it has a joint venture formed with Heleba in 2001. It also has offices in England, Italy and France.
In the past year, Potter said, Northern Trust, which has a total of $2.3 trillion of assets under management, has reviewed its businesses and designated the international segment as a key area for growth. As of June 30, Northern Trust's international market segment had $850 billion of assets under administration and $22 billion of assets under management.
"We are in the right place," Potter said. "The demographics continue to demand the service we deliver."
Analysts said strong growth potential exists in Europe but that many other U.S. asset management firms have decided to focus domestically because of difficult market conditions. "There are areas in Europe and Asia that are still underserved," said Kevin Daniels, a Boston analyst. "They are ripe for [firms] willing to spend and hire strategically."
Potter said the international business has become increasingly important to 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.
Potter said the company hopes to expand further in Asia, particularly in China. Northern formed 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 also recently named Wilson Leech a senior vice president in a newly created post, that of international strategic planning. Leech, who will be based in London, was head of wealth management services at State Street Corp. Leech said in a statement release that part of the reason he joined Northern Trust was its focus on market expansion by attracting, developing and promoting local talent.