Brown Brothers Harriman, J.P. Morgan Top Securities Lending Survey

(April 5, 2011) – Brown Brother Harriman, for the third year in a row, has emerged victorious in Global Custodian’s  annual Securities Lending Survey.

According to the survey, the Boston-based firm’s “ability to maintain earnings while controlling risk” has kept its average score “way above average in all fronts – and especially for its personalized and responsive client service.”

The only other securities lending provider to earn a Global Top Rating is J.P Morgan. “This year sees notable improvement on the part of J.P. Morgan,” Global Custodian wrote in a release. “Scores have risen both sharply and in every service area…Response levels are also up, and returning clients have noticed an improvement. Importantly, the bank receives the highest score in the survey for compliance with client guidelines.”

As for other securities lending providers, Chicago-based Northern Trust also saw large improvements in this year’s survey, while Bank of New York Mellon maintained gains that it saw in last year’s edition.

Interestingly, North American clients – those most affected by losses in securities lending cash-collateral pools – ranked their providers higher then those responding from Europe of Asia. “This finding partly reflects cultural factors, but also disappointment with limited lending opportunities and rising expectations, as respondents look to replace lost revenues by lending to counterparties in Asia and Australasia,” according to the Global Custodian statement. Not that cash-collateral losses weren’t mentioned, of course: “Reinvestment risk” was named as a priority by multiple lenders, according to the survey. “A lot of folks were burnt by their inability to understand how their program was structured and the collateral they were invested in,” wrote one respondent, according to Global Custodian. “The belief now from many is that they would rather not be in lending.”

Although not rated as global providers, two other firms – Deutsche Bank and eSecLending – also earned ratings in multiple categories. Deutsche – which has notably been benefiting from the increased decoupling of securities lending from custody – earned the best score for earning performance.

One hundred fifty-seven responses regarding 11 providers comprise the 2011 Global Custodian survey.