Major Australian Pension Fund Shifts Custody to State Street

January 10, 2011 ( - U.S. financial services firm State Street Corp. has received a contract to provide custodial services for an A$18 billion (US$17.9 billion) Australian pension fund, taking the business from rival banking giant J.P. Morgan Chase & Co.

The Wall Street Journal reports that State Street said it will add staff to handle all custody, fund accounting and complex tax services for REST Industry Super, the largest pension fund by membership in Australia, with 1.9 million policy holders. The deal is a big win for State Street, as the Australia market is dominated by National Australia Bank and J.P. Morgan.   

The news report said Australia has a large per-capita retirement pool as a government-mandated superannuation, or pension, program ensures the average worker stows 9% to 12% of their salary into a retirement account. That A$1.3 trillion wealth pool has helped entice several global money managers to grow their presence in Australia in the past year, including Blackrock Inc. and Oaktree Capital Management.   

REST said there was a due diligence process of more than a year before it made its decision to award the contract to State Street.