NTRS
#Thanks.
Our ---+ if you look at our business and our asset management business globally in the US, it has a strong balance between our asset ---+ our wealth management business and our corporate institutional businesses.
Outside of the US, that becomes largely an institutional base for our AUM.
And it has a significant position in our passive products, if you will, and particularly to large sovereign wealth funds.
Those are meaningful clients across the globe outside the US.
So there's obviously substantial pools of assets there, and they need those kinds of index products.
In the US, in the domestic market, we have a wide array of suite of products in our asset management that are attractive to our clients from alternatives to ETFs to mutual funds to cash products to active equity, et cetera.
So it's a much broader spectrum.
Institutionally in the US, we also have a broader array.
It's still has a heavily cash and index component on the institutional side, but we do have an array.
But on the wealth side, it's a much broader mix of product capabilities.
Tremendous synergies.
And if you think of it from a ---+ we may be providing the custodial services, and as part of a solution set to that client they need help or they are seeking help or they are seeking to outsource some of the pension responsibilities or the investment responsibilities.
We become a fairly natural solution for them.
And there is synergies in the ability to bundle that product and service together.
Yes, so we do have several markets.
You are correct where we have a negative rate environment.
We have the euro.
We have the Danish kroner.
We have the Swiss franc.
Our three areas where we have gone negative, if you will, with our clients.
In terms of the spread, if you will, on that, it's interesting.
In some cases, it depends on the reinvestment possibilities that we have in those.
So in some cases we have seen the spread erosion occur where the spread has narrowed, and in others we've been able to maintain that spread even with negative rates.
I will say that we ---+ on a continuous and an active basis, we monitor the markets.
We understand where we are able to reinvest.
And we have active dialogues with our clients about, in some cases, perhaps the need to press further negative into the rate environment where central banks continue to take more aggressive negative rate stances.
<UNK>, one thing that I would add to that is that of the three currencies where we are currently charging negative rates, the one that is really the most significant for us from a client balance perspective is the euro.
And I think we had mentioned last quarter that while we had seen a run-up in our euro balances when our rate was not negative, we did see that come down.
We went from about $4 billion yearly to about $3 billion.
Kind of stabilized at that level in line with what our expectations had been.
And I guess after that initial response, we have seen those balances drift up but just modestly.
In terms of the Swiss franc and the Danish kroner, the balance is there from clients that are really quite small.
The vast majority, I believe.
The vast majority.
Yes.
We don't as of our last asset and liability committee meeting because we walked through this scenario.
But we keep our eyes very closely peeled to ---+ I know what you're describing, and to date we don't have that situation, but we are continuing to stay close with the negative movements in the rates.
Most of our lending is domestic, so it's dollar based.
In fact, I believe all of our lending is dollar based.
Yes, thank you.
There are some, but they are relatively modest level of expenses.
There is compensation-related expenses that would move with that success in the foreign exchange trading market.
But there is not much else in the way of incremental expense that moves with that.
I would take a step back and say that our East region is very broad geographically.
It goes from Miami, Florida, to Boston.
So I think you need to sort of peel back into market-by-market type analysis, which we don't have in here.
So we've got markets within there that have stronger growth trajectories than what you see here overall.
We are and continue to have very large market share and meaningful presence in the Florida coast, and we're building out that presence from what I would say the Washington, DC, corner.
We have meaningful presence in New York but continue to work on increasing our presence and penetration in that market and all the way up to Boston.
So I don't know that I can specifically make a comment generically about the East because it's made up of so many markets along the eastern seaboard.
So some with great growth dynamics and some where we are continuing to invest and want to deliver more.
It continues to be a growth initiative for our wealth management area, and we continue to invest both marketing and, probably more important, talent dollars into the region to facilitate that growth.
I'll answer that with a few points.
One is, we have had success in regions where we've grown quickly.
So let me highlight Australia.
And we highlighted an Australian win, so there is an example where the regionality and our strength in that region has helped drive that market share growth.
That's one area where we've seen that growth.
Most notably has been our success in our servicing asset managers or our global fund services business.
We've seen really substantial double-digit growth in that business over the last three or four years.
And our ability to compete against our primary competitors in there and be successful has grown markedly over the time.
And then I would end with product and capabilities.
Technologies like what we have from in our hedge fund services, the Omnium acquisition and other elements of technology.
The combination of technology, regional strength, and growth, particularly in our GFS business, have allowed for market share gains.
In some cases it's geographic markets; in some cases it's product and capability.
So it's a combination of both.
And then, the scale that we've achieved in that business makes us a competitive force.
Thank you, Priscilla, and thank you, everyone, for joining us today.
Allison and I would be happy to take additional questions as the rest of this week unfolds.
And we look forward to speaking with you on our second-quarter call in July.
Have a good day.
Thank you.
