The merger of RBC Global Services and Dexia earlier this month gives the combined entity a total of $58.97 billion in assets under custody in the region - making it a formidable second tier player.
The $1.8 trillion merger, which still awaits the usual regulatory approvals, will bring together offices in Hong Kong, Singapore and Australia, allowing the two to combine services in global custody, fund administration, share registration and trustee.
"The office arrangements [in Asia] have not yet been determined since it is still early days since the announcement of the merger," says Rosemarie Kriesel, managing director of Dexia Trust Services Hong Kong. Though, she says there will be "no staff reductions as a result of the merger".
"[Our] first objective is to create a unique company with common culture and organization and to ensure a seamless transition for the stakeholders, especially clients and employees," says Kriesel. She says one of the first tasks will be to rationalize the group's combined sub-custodian network in Asia.
Dexia is the smaller in the partnership, contributing just over a quarter of the combined assets to the merged group, which will be called RBC Dexia Investor Services. But, in Asia proper, Dexia is well entrenched, having bought the businesses of Butterfield Trust in both Singapore and Hong Kong.
"We have had offices in Hong Kong since 2002 and in Singapore since 1998, whereas RBC has a significant presence in Australia. [That means] the only market where there is an overlap of services in Asia is Singapore," says Kriesel. Dexia currently has 46 staff in Singapore and 55 in Hong Kong.
RBC's biggest market is Australia. At the end of last year, the bank had A$21.3 billion in assets under custody in that market, made up of A$18.9 billion in domestic assets and A$2.4 in global assets. Its two largest clients are believed to be Perpetual and Maple-Brown Abbott.
RBC has won a few key Australian mandates in recent years, including picking up the global assets of JBWere, but it has also lost a few clients. In the last 12 months, both UBS and Merrill Lynch have moved their accounts elsewhere.
One of RBC's biggest strengths in Australia is its fund administration business. At last count, the company was administering about A$45 billion in assets for third party clients through its back office outsourcing business. Fund administration is also a core focus of Dexia in Asia. As at March 2005, Dexia was administering $14.8 billion of assets in the region, up by $4.6 billion from January last year.
Kriesel says RBC Dexia will "apply particular focus to the development of its value-added capabilities" such as fund administration.
"Pending regulatory approval, we will be able to make the critical investments necessary to satisfy long-term client needs in the competitive institutional investor services market. We will also concentrate on globalizing certain products, continuing to pursue key client segments around the world," she says.
"Both partners will put the emphasis on the integration of the two organizations and the rapid set up of an independent and integrated management structure, to help reach their common objectives."
With $59 billion under custody in Asia, RBC Dexia will be one of the larger second tier players. At the end of 2004 the three largest in Asia were: State Street with $449 billion under custody for Asia Pacific clients; JPMorgan with $429 billion; and Bank of New York with $227 billion.
