Gartmore hires US custodian

Gartmore said yesterday it had contracted the Bank of New York to provide global custody services for pounds 25bn of its assets under management. The deal transfers to the American bank responsibility for maintaining the security of the fund management group's assets and cash, collecting dividend income and ensuring cash is available for purchases.

The outsourcing arrangement follows the takeover of Gartmore by NatWest and its integration with NatWest Investment Management. Prior to the merger, the two fund managers managed their own custodial arrangements with different systems and custodians.

Andrew Brown, joint chief executive of Gartmore, said: "In the fund management industry, as in other fields, specialisation has become the key to providing clients with the highest quality service. This outsourcing arrangement will allow Gartmore to focus on our core investment management strengths, while ensuring that our clients receive sufficient value-added custody services."

The Bank of New York acts as sub-custodian for Gartmore in all overseas markets except the US. The move, thought to be the biggest outsourcing in Britain to a single custodian, affects about half of Gartmore's pounds 50bn assets and around 300 of the firm's clients.

There has been a trend towards the outsourcing of custody services as fund managers have moved towards investing in a wide range of markets around the world. The skills and technology required to look after those diversified assets has become increasingly expensive, providing opportunities for global custodians such as the Bank of New York, which is estimated to be responsible for assets worth pounds 1,800bn.