SWEDEN - State Street Global Advisors, SEB Securities Services and Foreningssparbanken have lost custody mandates with Folksam Insurance.

The change came as Folksam appointed Northern Trust as sole global custodian for its 17 billion dollars (13.8 billion euros) in insurance assets and mutual funds.

It is the first time a non-Swedish bank has been appointed to provide custody and related services to a Swedish mutual fund.

Northern Trust will act as sub-custodian to Svenska Handelsbanken, which in turn has been appointed as mutual fund custodian by Folksam.

Northern Trust has achieved this compromise working with Svenska Handelsbanken and the Finansinspektionen regulator, said Anne-Lise Winge, head of European sales for Northern Trust’s asset servicing business.

This solution allows a Swedish mutual fund business to opt for a global custodian, who can also offer trustee services through a local provider.

Cecilia Ardström, chief operating officer at Folksam Asset Management, explained that the three custodians’ services would not be required any longer.

Eva Tärnström, head of Nordic Custody Services at Svenska Handelsbanken, said: “It has been an interesting journey for us to create a model in co-operation with Northern Trust, which meets Folksam’s requirements.”

“This new set up opens up the market for more flexible solutions when providing services for the large client group which Folksam represents,” she added.

“We have worked very closely over an extensive period fine-tuning a service offering which is cutting-edge and will meet all of Folksam’s needs,” Winge also said.

“Through our relationship with Svenska Handelsbanken we have established robust trustee services enabling clients to consolidate their mutual funds and discretionary assets with a global custodian for the first time in Swedish history.”

Ardström said their review process had been “incredibly detailed and thorough”.

“One of our main drivers was a desire to enhance operational efficiency. As our analysis continued it became apparent that Northern Trust was the most suitably equipped provider to meet our specific requirements.”

Neither State Street, SEB nor Foreningssparbanken were immediately available to comment.

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