State Street sets up shop in Brunei

OVER the past five years, State Street Corporation has managed to grow its Bruneian portfolio, and its size has allowed the company to justify the opening of its new office in the Sultanate yesterday.

State Street, one of the world's leading providers of financial services to institutional investors, first made contact with Brunei in 1999, and from one client, they were able to build on their business, which led to the formation of their Bruneian office at the Empire Hotel and Country Club.

Nick Wright, head of State Street's global services business in South Asia, told the media during a press conference that the Bruneian office will have two people, led by Diviesh Mistry, head of client relationships, Brunei, focusing on their local clients.

"We will, of course, try to grow our business and hire more Bruneians and local expertise," he said, adding that it would depend on the success and outcome of their new office, which has allowed them to be physically closer to clients.

One highlight of having an office in Brunei, said Wright, is so that they will be able to understand the needs of their clients here. "We'll be able to get closer to our client and the market place, and understand their needs which will allow us to tinker around with our products and enable us to roll them out better," he explained.

One example Wright gave was their strong capability in Islamic finance. "There's a lot of variables in the market place. By being here, we get closer and understand specific needs and requirements to adjust to them," he said.

When asked how State Street can contribute to Brunei's Islamic finance sector, he said that they would be able to bring to the table what they're hearing in the broader industry.

"When we're (discussing) different accounting policy, foreign exchange or deposit rates, we've got lots of expertise to bring to the table. That's where we really like to engage with the local market place," he said.

Wright said that with Islamic finance, approximately half the investors in Islamic funds are non-Muslims. "They've really invested in it as a result of ethical investments. Around the globe, we have a whole range of products that monitors that (sort of) ethical investments," he said.

Another reason that State Street has set-up shop in Brunei is because of the Sultanate's involvement in Asean and its efforts towards greater integration and harmonisation of regional capital markets by 2015, which would "ease the flow of products and services across border of member countries".

Wright sees Asean as a key point, whose economy rivals the like of China and India in terms of size (at approximately US$2 trillion), which makes Asean the fifth largest market in terms of purchasing power.

"That's one of the key elements of why we're here, our focus on Southeast Asia. We're very involved and supportive of Asean initiatives happening across the region," said Wright.

State Street is also looking at significantly increasing its non-US revenues by the end of 2014, a goal which requires them to invest and commit to new and growing countries like Brunei.

"We looked (at) that objective two years ago and now we've started thinking of what the execution steps are and looking at the need to expand our physical presence. Those are the two things coming together and looking at other countries make sense," he said.

Wright also said that the economic fundamentals and potential growth of Brunei's economy justifies their presence here.

"Brunei has low inflation, high per capita income, pro-investment tax system and a well-developed social and business infrastructure. Brunei aligns with our strong focus on providing services and products to sovereign wealth funds and government entities," he said.

State Street's long-term relationship clients across the region usually consist of government agencies, central banks, and pension funds, just to name a few. Wright said that the company's Bruneian clientele are no different as well, but added that it would prefer not to reveal them.

State Street has three main businesses, State Street Global Advisors, State Street Global Services and State Street Global Markets.

When asked which product Bruneian organisations engage the most, Wright said that they are "very open" and look across the board at different possibilities.

"That ticks the box for us and we feel we can add some value across the table," he added.

State Street operates in 26 countries and more than 100 geographic markets worldwide.

The American company has a total of US$22.8 trillion of assets under custody and administration, and US$2.1 trillion in assets under management as of June 30, 2011.

The newly opened office is the firm's third in Southeast Asia after Singapore and Malaysia. The Brunei Times