More than a year after flagging a dual outsourcing deal, the $30 billion plus ANZ Investments completed half the job last week in a signature agreement with BlackRock.
But with BlackRock now signed-on for various investment risk management and operational services, the bank-owned fund manager has still to finalise plans to bring on Mercer for as-yet unspecified duties.
“We are continuing to explore a potential partnership with Mercer,” an ANZ spokesperson said.
It is understood the drawn-out talks with Mercer centre on pricing and scope for services such as advice on asset allocation and manager selection, which remain in-house ANZ responsibilities for now.
Regardless of the outcome of the Mercer negotiations, the BlackRock appointment marks a significant external shift for the bank investment house – as well as another strategic win in NZ for the world’s largest fund manager.
BlackRock already provides similar risk management and operational services to both AMP and ASB, which collectively manage more than $30 billion of retail money in NZ including about $23 billion in KiwiSaver.
Both AMP and ASB also use BlackRock as an underlying passive investment manager – almost exclusively in the case of the former and largely for global equities for the latter.
Earlier this year ANZ replaced long-standing international shares manager, MFS, with a BlackRock multi-factor fund in July for a $4.6 billion mandate.
Under the just-inked agreement, ANZ will tap into the BlackRock Aladdin – short for ‘Asset, Liability and Debt and Derivative Investment Network’ – risk management system. The bank has also hired BlackRock to manage “implementation of portfolio cashflow, foreign currency hedging and rebalancing”, according to a release last week.
“BlackRock’s systems will help us make decisions around potential changes to the overall portfolio, including adding new exposures,” the bank spokesperson said. “But for now, we’re not in a position to comment about what we might do, or when.”
The ANZ funds arm, headed by Fiona Mackenzie, will switch over to the BlackRock platform from its current in-house run system by the end of October.
“The intention of the partnership is to improve customer outcomes, not replace existing staff,” the spokesperson said.
And the BlackRock project is “part of a broader piece of work” to upgrade services for ANZ KiwiSaver and fund investors.
“The scope of that work includes looking at our investment operations, but for now there are no plans for any changes.”
Last week, however, saw the end of an era for the ANZ wholesale investment arm, which officially closed up shop after more than two decades in the game.
Since announcing plans to shutter the wholesale division in May this year, ANZ has shifted about $3.5 billion of client money – mostly in cash and fixed income portfolios – to new homes.
Harbour, Mercer and Nikko are understood to be the main beneficiaries of the shock ANZ wholesale exit. BlackRock, however, picked up the single-largest ex-ANZ institutional mandate after winning about $750 million for an AMP third-party manager slot in its KiwiSaver and employer superannuation schemes.
