Korea’s National Pension Service (NPS) has chosen two US firms as global custodians for its 929 trillion won (US$619 billion) in foreign assets.
State Street Bank and Trust and Bank of New York Mellon (BNY) were named as first and second priority bidders, respectively.
The decision was made after business briefings, proposal evaluations and on-site inspections, the Korean pension giant says in a statement on July 3. It’s not clear when the bids were called.
The NPS plans to sign the final contract with the two firms by early next year after detailed technical negotiations regarding their duties. The contract will be for three years, and could be extended for two more years depending on evaluations.
The pension fund intends to have separate trust agreements for each asset class with the two firms in order to diversify risks and enhance expertise.
According to the NPS, the choice of custodians was “driven by a focus on securing a global-level back-office partner to securely support” its policy of expanding overseas direct investments and diversification.
The NPS is the world’s third largest pension fund, managing 1,670.7 trillion won of assets as of end-April. Around 55.7% of the assets were invested overseas, with 604.5 trillion won in stocks, 103.1 trillion won in bonds, and 221.4 trillion won in alternatives.
