Fifty years after the global custody business was sparked alive by both BBH and Chase, it seems appropriate to look back and identify some of the leaders who helped to transform the industry from a pure-play, back-office operational backwater to being the trusted provider of value-added services to asset owners and managers around the world.
As this is a highly personal list (and yes, I do like all of them, but I also admire and respect them and their achievements), I encourage you to send in your additions or alternatives or objections, either by email or through the comments section on the website. This should be fun.
Marsh Carter
More than any other leader, March Carter transformed the custody model and forced every competitor to rethink their pricing models. Hired by the visionary State Street CEO, Bill Edgerly, as president and COO in 1991 from Chase, Carter intuitively understood that custody was primarily an information business. He had been frustrated at Chase by its unwillingness to invest in the technology needed to realise his vision, so Edgerly called at exactly the right time. After Carter replaced Edgerly as CEO in 1992, things accelerated.
Critically, Carter had an early opportunity to put his indelible stamp on the industry when the CalPERS business came up for bid. For possibly the first time in a bid of this size, State Street went in with a bundled fee, effectively combining the custody and securities lending tariffs to lower the overall cost to CalPERS. It worked – and every other provider cried foul. Soon after, the equally important CalSTERS moved to State Street.
During Carter’s 10-year tenure, AuC/A grew from USD1trn to USD6trn, whilst State Street’s market cap went from USD2.4bn to USD22bn. He also successfully repelled the unwanted advances of BNY (and the “white knight” offer from Citi), oversaw a massive expansion of the product range – all part of his “egg chart” strategy to cover all aspects of the investment lifecycle – and put some real muscle and investment behind the international franchises.
Okan Pekin
When Pekin took over Citi’s investor services business in 2014, the franchise was in a poor state. Previous leaders either didn’t understand the business, or were incapable of capitalising on the obvious strengths of the global network and the advantages of being a universal bank. Pekin lost no time in implementing a turnaround plan, focused on platform rationalisation, a new senior management team, and leveraging the network much more aggressively.
He had to take some tough decisions, none more so than the sale of its alternative administration businesses to SS&C in 2016, making it clear that Citi just couldn’t make it commercially viable – multiple platforms and licences being one of the reasons. There were hiccups, notably as Citi continued its quest to find a marquee client for its outsourcing services, which led to the ill-fated Threadneedle deal. But it learnt a valuable lesson from this act of hubris – and, since then, Citi has been remarkably astute at picking winners. A highpoint has been the growth of the global ETF franchise, endorsed in 2021 by its appointment by BlackRock following the rebalancing of its ETF provider panel. Citi was also one of the first to coordinate mutual fund conversions to ETFs with Dimensional, a major client both in the U.S. and overseas.
Pekin is still up for the fight. He is determined to see Citi at the forefront of the digital and data revolution, for example, and is currently building a world-class execution services team. Following the creation of the services business unit under Shahmir Khaliq (a securities services alumnus), Pekin and his franchises are enjoying the attention of top management, with Jane Fraser, CEO, calling securities services the “hidden” gem amongst its crown jewels. Some turnaround.
Digger Donahue
Douglas “Digger” Donahue is a lifelong BBHer, having joined from Harvard Business School in 1976. He soon came under the wing of Stokley Towles, the very embodiment of a Bostonian gentleman financier, who had helped to wean BBH off commodities-based financing to mid-market banking. It was Towles who first saw the potential of the global custody business, prodded by major clients like Putnam, Scudder and Fidelity, all of which were looking for a custody and administration solution for their overseas assets.
By 1997, Donahue was put in charge of the entire custody business, rebranded as investor services. At first, he was not a fan of two key business lines that would eventually become central to the industry: middle-office outsourcing and alternatives administration. Nothing if not pragmatic, he relented and embraced both, winning key mandates and building profitable franchises. He also oversaw the growth of BBH’s ETF business, which punches well above its weight.
In 2008 Donahue was appointed managing partner of BBH, a post he held until 2015. Notably, Donahue was the first partner from the investor services business to take the top job. Today, he remains a partner and helps out primarily with the private equity side of the partnership.
Pete Cherecwich
When Pete Cherecwich joined Northern Trust (NTRS) in 2007, he had already earned his spurs as a senior manager at State Street. But the challenge at NTRS was significant: whilst it had always been known as a highly-regarded pension fund/asset owner custodian, it was almost nowhere in the faster-growing fund services/asset manager sector. He was tasked with changing that, building a global fund services franchise. In his 17 years at the firm, he has done exactly that, assembling a first-class team globally – a mixture of internal and external appointments – and a roster of blue-chip clients that demonstrate the competitiveness of the proposition against even the largest players.
As president of the asset servicing business, he has benefited from the unwavering commitment of Mike O’Grady, CEO. Missteps have been few and far between – insurance has been a damp squib and Matrix will never reach its planned potential – but otherwise it has been a case study on how to manage a business whilst growing a business.
Patrick Colle
In many ways, Patrick Colle represents the ‘white gloves’ approach to management succession. BNP Paribas’ securities services business had been poorly served by Jacques-Philippe Marson, his predecessor, and some of his management team. With Marson eventually being fired in 2009, the bank needed a leader who had not been tainted – cometh the hour, cometh the man. Colle, who had been running the securities services operation in the UK, was not part of the Marson cabal, and had a clear vision for how the global business should look and operate.
No sooner had he got his feet under the desk, than Colle reorganised the business into four pillars: corporate trust, markets, asset & fund services, and clearing & custody. It was an astute move, as he rightly calculated that, in any one reporting period, at least one business would be doing well. Colle put good people in charge, as well as strengthening the regional management structure. Some remain with him to this day.
BNPP transformed itself into a European powerhouse, whilst expanding across Asia and Latin America. At times it seemed as if it was becoming the last of the any-to-any custodians, but nowadays it prefers to point to its highly selective approach and its M&A discipline (its last custody-related acquisition was in 2020 for Sabadell’s Spanish depositary business). Meanwhile, Colle was working on improving linkages with the broader bank group, especially the corporate & institutional banking and global markets units. In 2022, after a significant amount of work, BNP Paribas Securities Services merged with BNP Paribas S.A., the culmination of a three-year project that, at one stage, had some 150 people working full-time to complete it.
Colle received due recognition when he was appointed chairman of financial institutions coverage in addition to his existing brief. When he eventually decides to move on – which doesn’t seem likely in the short term, especially in the absence of a clear succession plan – Colle can justifiably claim that his legacy will be a much improved, highly competitive provider that competes at all levels in its chosen markets.
Honourable Mentions:
Gunjan Kedia (U.S. Bank), Vivian Eversole (Chase), Tom Perna (BNY), Cian Burke (HSBC), Bruno Prigent (SGSS)