Securitization Trustee of the Year - U.S. Bank
Running a successful securitization trustee business is all about balancing the need to sustain high levels of service, while building and maintaining scale by investing in the business. It is a difficult juggling act at the best of times, but in years of exceptionally strong volume, such as 2019, it marks the best from the rest.
U.S. Bank’s securitization trustee business had a banner year in 2019. In terms of values, it worked on $116 billion of public ABS and MBS deals and $86 billion of public CLO deals. In terms of volumes, it worked on 201 public ABS and MBS deals and 191 public CLOs. This translates to a 32% total market share of the ABS and MBS market – marked by a 35% year-over-year increase – and a 50% total market share of the CLO market. And this is just on the public side. If you add in private transactions, total volumes and values are “much, much bigger,” says Kevin Weeks, SVP and Head of Global Sales for Global Corporate Trust and Institutional Trust and Custody at U.S. Bank. “In truth, we’re orders of magnitude bigger than our competitors.”
GlobalCapital’s poll results mirror these underlying numbers. Overall, U.S. Bank took 39% of the votes. By comparison, the next closest firm took 28% of the votes. U.S. Bank also led by number of issuers, investors and banks that voted for it. Among those respondents, the firm also received 39% of the votes, outpacing the second placed firm, which took 29%.
“Scaling our business to match the overall growth of the market and our share of that market was an issue we had to manage well,” says Weeks. “We expect a high degree of quality in everything we do, so we need lots of good people and technology that can scale well.”
U.S. Bank’s stated intention is not necessarily to be the biggest player in the securitization trustee market; it wants to be the best. And from there, high levels of market share naturally follow.
“We set a very high bar for service and receive great feedback from our clients for our financial stability and the continuous investment we make in the business,” says Joe Nardi, SVP and Head of Global Structured Finance at U.S. Bank. “Last year we made considerable investments in both technology and in expanding our workforce, so we could adhere to the expectations we set for ourselves.”
On the tech side, the bank’s investment services portal, Pivot, has been crucial in allowing it to operate at scale. It has features that enable clients to better manage both new issues and the ongoing servicing of existing securities. “Pivot delivers functionality to help our clients to streamline their operations in areas such as reconciliation, self-service reporting, document management, analytics and process workflows,” says Suzanne Hansen, Senior Vice President, Business Technology Strategy, Investment Services at U.S. Bank. “It’s been a game changer for us in the corporate trust space.”
In 2020, U.S. Bank continues to advance its tech offering. Internally, it has a roadmap to achieve a digital transformation of the key business processes of the corporate trust business, working in conjunction with its clients. This is expected to be achieved in the next two to three years, a timeline that has been accelerated now by the COVID-19 crisis. According to Hansen, the roadmap will focus on more digital delivery of analogue process such as e-signatures, KYC and onboarding processes, as well as a big push into artificial intelligence for digitization of client instructions.
Geographically, U.S. Bank has corporate trust offices in 49 locations throughout the United States, with nine sites specializing in document custody and three offices in Europe. This geographic spread affords the bank two clear advantages. Firstly, it can service clients wherever they may be located, rather than trying to service them only from East Coast hubs. Secondly, it allows the bank to hire more people from a much wider base. “Wherever our clients are, that’s where we put our service,” says Herb Schofield, SVP and Head of the U.S. CLO business at U.S. Bank. “Coast-to-coast office locations and document custody sites enable us to work closely with clients where they’re located. It also gives us a much broader pool of talent. We’re not limited to hiring from the East Coast; we’re able to hire the best talent across the U.S. and Europe.” This strategy, alongside its digital push, has allowed the business to achieve the scale that has been necessary to maintain its high service levels in a year of exceptional volumes.