Barlays Global Investors
is handing over its domestic asset
administration business -- and its staff -- to Investors Bank & Trust
(IBT), which is owned by Investors Financial Services
. While the move
follows an industry-wide trend to outsource backoffice operations, unusual
in this deal is the complete transfer of the business, including its
employees, equipment, and physical plant. The transfer is expected to be
effective on May 1.
"We're transferring the US asset administration business to IBT, which
wanted to establish a West Coast presence," said BGI spokesperson Tom
. "This transfer also involves 275 BGI employees who will become
employees of IBT, still serving their biggest client, BGI."
Taggart estimated that BGI currently has approximately 1,500 US employees,
so the switch will affect approximately 18 percent of the domestic
workforce. Taggart insisted that the transfer is unrelated to the bear
"This move has absolutely no relationship to the market environment," said
Taggart. "This is a strategic move the BGI has thought about for quite a
BGI will realize a known but undisclosed savings due to the switch.
However, as an added benefit, BGI will not have to worry about converting
its technology platforms to accommodate T+1 settlement.
"The T+1 is actually a really big thing," explained Taggart. "That alone
with a lot of other things that you have to do on a technology front, it's
something that IBT is way ahead of the game on and certainly played into
the decision to select them."
The BGI employees will remain in Sacramento, while IBT's existing offices
in Walnut Creek, California, and San Francisco will eventually be merged
into the Sacramento office. The new division will report to Mike
, executive vice president of operations.
Why not hang onto the existing facilities, if IBT is looking towards West
"It made more sense to combine into one facility," explained Kevin J.
, chief executive officer and president of IBT.
IBT, which has performed mutual fund administration since 1996 and ETF
administration since last year, wins the rest of BGI's US asset
administration business as well as a five-year exclusive contract. IBT is
expected to net $50 million annually from BGI.
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