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Tuesday, January 19, 2010
A Mutual Fund Servicer is Back on the Block
PNC is looking for a buyer for its investment servicing business (formerly known as PFPC), sources told The MFWire.
Bank of New York Mellon (BNY Mellon) , Royal Bank of Canada (RBC) and Northern Trust are among those looking at PNC Global Investment Servicing (PNC GIS), according to one of the industry sources. JPMorgan initially expressed an interest but has recently taken a step back from discussions, the same source said.
PNC spokesman Fred Solomon said the company does not comment on rumors and speculation. Mike Dunn, a spokesman for BNY Mellon, gave a similar response. A JPMorgan representative was not immediately able to comment, while spokespeople for RBC and Northern Trust could not immediately be reached.
Wilmington, Delaware-headquartered PNC Global Investment Servicing provided services for $2.2 trillion in total fund assets and 80 million shareholder accounts as of end-September. It has offices in Ireland, Luxembourg, London, Poland and also has a presence in the Cayman Islands.
As of September 30, PNC Global Investment Servicing had 4,561 employees, down from 4,663 at the end of June and 4,969 at the end of September 2008.
This isn't first time that PNC Global Investment Servicing -- which until the summer of 2008 was known as PFPC -- went on the block. PNC had shopped the business three years ago, according to the source.
The sale chatter reemerged in the fourth quarter of last year, sources said.
The buzz comes as PNC Financial Services Group CEO James Rohr was quoted in media reports late last year that PNC will pay back $7.6 billion of TARP money in 2010.
Pittsburgh-headquartered PNC, whose empire includes BlackRock (it owns about a third of the New York City- based asset manager), took TARP funds to help finance its purchase of National City Corp., parent of fund firm Allegiant Asset Management, at the end of 2008. (In September of last year, PNC merged Allegiant with PNC Capital Advisors Inc. to form a new entity called PNC Capital Advisors LLC.)
In the third quarter of last year, PNC Global Investment Servicing posted earnings of $19 million, down from $34 million in the same period in 2008. Servicing revenue amounted to $200 million, down 18 percent from the year-ago period because of lower equity market values, high redemption activity and account closures over the past 12 months, according to the earnings release.
As of September 30, the unit provided accounting and administration services for $795 billion of net fund assets and custody services for $427 billion of fund assets. In the year-ago period, the numbers were $907 billion and $415 billion, respectively. In the earnings release, company officials attributed the drop in accounting/admnistration fund assets to market levels and the loss of a client, whom they did not identify.
PNC Global Investment Servicing started offering fund accounting and custody services to '40 Act clients in 1973 and by 1979, it added partnership servicing, banking transaction services and full-service transfer agency to its repertoire.
In December 1999, PNC Bank acquired First Data Investor Services Group for $1.1 billion, making PFPC the largest full-service transfer agent in the country. In 2003, PFPC sold its retirement services business to Wachovia.
Other PFPC acquisitions include Automated Business Development Corp., a provider of Blue Sky compliance services to mutual fund firms (2000), ADVISORport, which runs online managed account and unified managed account model platforms (2003), Albridge Solutions, a provider of portfolio accounting and enterprise wealth management services (2007) and Coates Analytics Group, which provides asset managers with analytics tools to strengthen distribution (2007).
In March 2008, Steve Wynne became CEO of the business and four months later, the unit rebranded as PNC Global Investment Servicing. In January of last year, the unit rolled out full-service processing for ETFs.
Printed from: MFWire.com/story.asp?s=23933
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