State Street Wins $224B Bank of America Contract
March 14, 2005
Bank of America Corp. will outsource back-office operations for $224 billion of assets to Boston-based State Street Corp. and Boston Financial Data Services, a joint venture of State Street and DST Systems.
State Street, which will now provide custody, fund accounting and financial reporting for the BoA funds, has already been performing administrative work for the Columbia funds.
Trimming the number of companies it uses to do back-office work from five to two, BoA, along with the two service providers, is expected to employ 450 people dedicated to the bank's mutual fund operations. "Reducing the number of vendors allows us to capitalize on efficiencies, build consistent internal controls and manage risk more effectively," said Christopher L. Wilson, head of mutual funds at Columbia Management, Bank of America's asset management arm. "Ultimately, this will improve the quality of service that we provide to our shareholders."
Its deal with State Street makes Bank of America one of State Street's biggest clients. "From our point of view, this is one of the largest investment servicing mandates in the industry," said Hannah Grove, a State Street spokeswoman.
The centralization of back-office mutual fund operations signals the bank's future efforts to get rid of overlapping funds, which the company plans to do later this fall, said Brian Moynihan, president of wealth management. Also, as part of its decision to move its wealth and investment management operations to Boston, BoA said it will consolidate the back-office operations of its mutual funds in the city.
The consolidation of Columbia Funds, Nations Funds and Galaxy Funds, the bank's three mutual fund families, which have been run from different regions in the country after Bank of America's merger with FleetBoston Financial Corp., is expected to add 100 new jobs to Boston.
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