GlobeOp Begins “Lift-Out” of ECM Operations
July 1, 2010
Fund administrator GlobeOp Financial Services on Thursday said that it will take over the investment management operations and staff of European Credit Management Limited and provide continuing support and services to this asset management subsidiary of Wells Fargo & Company.
GlobeOp will provide ECM with trade matchng support, pricing and valuation analysis, financial reporting and net asset valuations – tasks that had previously been conducted by ECM in-house.
The “lift out” will involve about 40 London-based employees and some temporary staff of the Wells Fargo unit, which oversees the management of about $15 billion in assets. The staff will be transferred to GlobeOp’s office in London on Thursday. Complete transfer of the operations is expected to take nine to 12 months.
ECM will retain its current shareholder recordkeeper in Luxembourg and GlobeOp will be responsible for reconciling ECM’s records with those of its other third-party provider.
To do its middle- and back-office work for ECM, GlobeOp will also be responsible for aggregating data from ECM’s prime brokers and other counterparties as well as its front-office trade management system.
GlobeOp relies mainly on proprietary technology but also uses software from Advent for portfolio accounting and Thomson Reuters Kondor+ for trade capture and real-time position keeping.
As one of the few remaining non-bank owned administrators, the New York and London-based GlobeOp is best known for its expertise in processing over-the-counter derivatives.GlobeOp has a total of more than 1,000 fund clients of which about 300 had conducted their operations work either in-house or with a GlobeOp competitor.
The deal marks the first time that GlobeOp has done a lift-out of middle and back-office operations for a fund manager—aka taking over not only its work but also its staffers.
Such a scenario, say fund administrators, has not won favor among fund managers and fund administrators over the past few years because it has not generated the expected huge cost savings.
Fund managers, who are also more hesistant to give over complete control of their data and operations, have instead opted on a more modular approach—outsourcing only a part of their operations.
“Because of GlobeOp’s commitment to robust corporate governance, transparency and operational controls, we are confident in their ability to provide us with the comprehensive services and support necessary to ensure a seamless transition for our clients,” said Tom Hoops, executive vice president of Wells Fargo Asset Management Group in a statement issued by GlobeOp on Thursday. Wells Fargo declined to comment further.
