The Indian managing director of JPMorgan Bank Luxembourg explains why he chose to settle in the Grand Duchy, talks about the bank’s strategy and his key objectives as a CEO, and describes JPM’s commitments in Luxembourg’s fund industry, philanthropy and more generally in the community.
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Founded in 1973, JPMorgan Bank -Luxembourg first specialised in private banking business before shifting in the late 80’s to the fund administration and services activity. As part of JPMorgan Worldwide Securities Services, the Luxembourg’s branch – which counts 540 employees – provides custody, fund accounting and administration as well as securities services to large institutional investors, alternative asset managers as well as debt and equity issuers.
Last December JPMorgan Hedge Fund Services opened an office in Luxembourg. The new branch will offer custody, administration, accounting and outsourcing services for hedge funds and funds of hedge funds to existing and new clients. After 15 years working at Citibank, in India and Luxembourg, Sanjiv Sawhney joined JP Morgan Bank -Luxembourg in March 2007 where he was appointed CEO.
A few years ago, you chose the Luxembourgish nationality: what was the major motivation behind this decision?
“I came to Luxembourg for six months, and that was fourteen years ago. I started my working life in Bombay, now Mumbai. When I came to the Grand Duchy, I fell in love with its openness as a location. It was relatively hard-working, but still relaxed from a life style point of view compared to some much busier cities. For someone who is in the funds business, to learn and grow in the Luxembourg marketplace is tremendous. It is a small country, but as a financial centre it ranks number two in the world-wide fund industry after the US. These six months kept increasing. I was in an industry I like, operating in a sector I was happy working in. You could learn much quicker than you maybe would have done in other larger centres. That is the reason why I stayed on.
What were the major benefits of acquiring citizenship?
“Obviously you feel more at home. It is just about being a stronger part of the society you live in. It also gives me the opportunity to continue to be part of the Luxembourg’s national cricket team.
How could you sum up JP Morgan’s 35 year-presence in Luxembourg?
“If you look at the history of JPMorgan in -Luxembourg it is not dissimilar from the other foreign banks. We started in 1973 with a very strong component of private banking. The private banking business continued until 1989. As part of the UCITS regime, we then started focusing on activities like depository bank, custodian services and funds administration, as the industry started to develop at that time. JPMorgan kept growing in the funds industry and with the funds business, to the extent that the private banking was slowly diminishing as the years went by. Now we are providing only global funds services from Luxembourg. We strategically made our decision to grow our fund presence and our Worldwide Securities Services (WSS) business here. It was the right direction for our business growth.
What are the 2007 company’s results?
“JPMorgan in general has had significantly strong 2007 results. There have been challenges as the whole financial industry has experienced, but the figures show that we came out stronger as an organisation, compared to a number of our peers. From a pure Luxembourg perspective we had a record year in terms of financial results. We had growth of almost 30% in assets. We have been number one for the last two years according to the Lipper (Fitzrovia) survey. We expect to be number one again this year. We further strengthened our position as a strong service provider in the fund administration and custody business in Luxembourg. And I think, very importantly for us, that we had the benefits of growing with our existing clients, but at the same time, in 2007, we built relationships with some new clients.
How do you explain that new clients leave your competitors and turn to you instead?
“I think we are very fortunate to be working with some very large and successful asset managers who look at us as being a service provider and partner to help them grow their business. Our success has been to support their increased complexity within their fund ranges and therefore to help them grow their business. This in turn has helped us grow our business. That explains our organic growth with our existing clients. Furthermore, as we service these large clients of ours, it has helped us to develop our service offering, service delivery, our capability and quality provision, which has positioned us very well to be able to take on new clients as well.
What is the 2008 outlook?
“I think 2008 will be as challenging, if not more, than 2007. A lot of our clients are looking forward to launching new funds and new products with us. We also believe that many clients will be using more sophisticated and complex products. Our key focus will be on further co-operation and enhancing our clients’ experience. There is a lot of new technology being implemented, globally. This year we will again upgrade our platforms, to cope with the business complexity. We never forget that the human factor is important for us, too. Therefore, we would like to continue positioning ourselves as an ‘employer of choice’ in Luxembourg. As a large player in Luxembourg and in the world, we believe that we provide a large possibility for career opportunities and business positions to our staff.
Does this strategy also apply to the new launched JP Morgan hedge funds services branch?
“You may also know that JPMorgan Hedge Fund Services opened an office in Luxembourg last December. Mario Pirola, who joined JPMorgan Bank Luxembourg’s senior management team in April 2007, now heads the new office closely with me. Luxembourg is an important market for our existing and future hedge fund and fund of hedge fund clients, and opening a full service office in the Grand Duchy is an important part of our expansion strategy into additional domiciles. We want to be closer to our clients and service them on the ground. JPMorgan Hedge Fund Services offers hedge funds and funds of hedge funds administration, custody, middle- and back-office services, as well as full outsourcing for day-to-day fund administration and financial services (cash management, foreign exchange, credit). These cover more than 240 funds representing approximately 75 billions dollars in assets under management. HFS is already present in Bermuda, Boston, Dublin, Greenwich (in the United States), Hong Kong and London. The new branch will extend its operating and servicing platform to Luxembourg’s hedge funds and fund of hedge funds sector. According to the ALFI, this segment represented in 2006 46% of the total funds industry, with 211 billion dollars assets under domiciliation and/or management. As the Luxembourg hedge fund and fund of hedge fund market grows, we also intend to grow with it.
How do you anticipate the Lipper 2008 survey results?
“Our anticipation is that we would come out from this survey as number one this year, also. We have grown from 300,4 billion dollars of assets under administration to 358 billion dollars. On the custody side, if we include the sum of the sub-custody business, which we also run from Luxembourg, we come to 460 billion dollars asset under custody. I would expect us to be right on top this year as well. We would like to believe that 2008 will help us to further cement our position.
Among the larger entities in Luxembourg, JPMorgan seems to be less known: how do you explain it?
“All I can say is that we are going to change it! And we are working on it. We are going to make sure that we are as visible as our size mandates. Honestly we never had a dedicated external communication function. The business has grown - organically - so well that we really never needed to advertise or to put ourselves out in the marketplace. This will be an advantage to attract those talented individuals who want to come and work at JP Morgan. Now, the goal of our external marketing is to make sure that people know that JPMorgan is an operating institution here in Luxembourg, and it is a fun place to work. Last year we hired 150 people, and we are looking at hiring up to 100 people this year.Apart from this we are very committed to philanthropy and to the community. We believe that, given our size in Luxembourg, we should play a strong role in the community. One of our flagship projects last year, for instance, was supporting the Kannerduerf Foundation, which inherited a farm in Alzingen. JPMorgan raised money to help renovate the infrastructure. The same with City Jogging, which has been a summer fixture in Luxembourg for 25 years. For the last three years, JPMorgan has sponsored the event in partnership with the Fédération Luxembourgeoise d’Athlétisme (FLA). As this year is the 25th anniversary of the JPMorgan City Jogging, there will be additional events this year to celebrate.
How would you define the notion of ‘employer of choice’?
“In one sentence: an ‘employer of choice’ is the company everyone gets up in the morning and looks forwards to going to and to doing his/her day of work for. It is about providing the right opportunities to the people who work there. It is also about making the working environment a better place and making sure the people are consistently trained and equipped to cope with the complexity of business.This also means two things: we should be the ‘employer of choice’ for hiring new talents from the marketplace. Even more important than that is that the people working here feel good.We are in a marketplace where labour is the premium. We obviously compete with other large organisations for a limited resource pool. All of us know that the business and industry is growing at a significant pace. Therefore, the people dimension is really very important.
It is quite unusual for a bank’s CEO to have a back office and an operational background.
“This gives me the opportunity of seeing the bank from all the different aspects. I started the first few years of my career in technology. Then I moved to project management in terms of migration of businesses, systems and platforms. Then I had a significant role in the day-to-day operations, followed by preparing strategic direction for product enhancements and regional development.In my current role I feel there is a bit of all these elements from the last three or four different jobs I have had. And a key element of that was the operations experience, because it is significantly what our service delivery is about here. Indeed, we are a very large operations centre in the Grand Duchy, as we provide funds administration, custody and transfer agency services to large asset managers.
One year ago you joined JPMorgan bank: what conclusion do you draw from this first year as the bank’s CEO?
“We are very fortunate to work with the largest asset managers globally. We have a very strong team on the ground; we are about 500 people, who have been a key factor in servicing the -clients. We are a very strong component of our regional business. This year has been a very positive experience. But the growth needs to be managed correctly. And we continue seeking talents in the marketplace. We are just in the process of finalising a contract for extra space for additional staff.
What are your key objectives?
“One of the key objectives is to get the clients’ experience to be much stronger. I would like our service levels, to be at a level of quality and execution which our clients are the most happy or comfortable with, and hopefully they can recommend us to other clients. A second key challenge is the people agenda: we are in a growth market with a limited workforce. Make sure that we are an ‘employer of choice’ to attract and retain talents. The third key objective would be the visibility of our institution, which shall be in line with our size and the marketplace. Whereas the fourth one, which is really related to the first key objective, would be to ensure the right level of investments and the delivery of technology and operational processes to be ready for the increasing business complexity.
Could India be a talent supplier for the financial centre?
“I think it already is. Globally a lot of talent and workforce are increasingly supporting international businesses. Whether these are Indian companies developing internationally, or international companies, which come to India and benefit from the workforce.If I look specifically at the financial industry here in the Grand Duchy, the product we sell is a Luxembourg-domiciled fund. It is one of our key strengths to be able to differentiate the product.Whilst Luxembourg companies will continue to use Mumbai or any other places like India as centres where commoditised activities can be placed, its working population and fund products complexity will still remain its main strengths.If we do commoditise some businesses into such centres, it is natural that some of the stronger performers of these centres will be attracted locally in order to help the business grow here as well. I think that a lot of companies are starting having links there. Luxembourg is now much more visible as well, among other reasons due to the ArcelorMittal merger, which opened up much more visibility.
How can Luxembourg play the differentiation card?
“In the Grand Duchy we should continue doing what we do well. What we definitely do well is to ensure and keep ensuring that the -Luxembourg fund product is a strong attraction for a variety of reasons. As well as a place where asset managers want to grow their business.Nevertheless, I think that Luxembourg could do a much better job at advertising the lifestyle quality we have here. We work hard, we do very good business, but at the same time we enjoy a life style that a lot of larger cities cannot provide.We try to play a strong role in the local banking and ALFI groups. Different people from JPMorgan Worldwide Securities Services sit on these organisations. It is all about working towards the growth of our financial sector, collectively as a group, across different banks in order to position Luxembourg well.
One of my key goals is to be the ambassador of our organisation in Luxembourg, with respects to our clients, our regulators, our financial sector. But at the same time, another aspect of my role is being the ambassador of the Luxembourg industry within my organisation as well. Making sure that we have the right support to getting our strengths and people into the industry and make sure that the place growths as a financial centre.It is also about making things happening here. For example, the way we reacted to the SIF law or we implemented the UCITS III early or how we adopted European directives earlier than the other financial jurisdictions: it is a part of the role that I would see as positioning our brand, our financial sector within the organisation. If you look at the Luxembourg’s fund products, the business is getting more complex. Which is good because it allows us to develop as an industry, as we have a wide product spectrum, from the simple to the complex.
Therefore the importance of strong regulation and governance structures is essential. I think that this is one of the major strengths of our fund-domiciled jurisdiction. Because there is faith in these regulation and governance models, which I think is essential”.
Sanjiv Sawhney: Raising the funds
From Mumbai to Luxembourg
Born in 1969 in Mumbai (previously Bombay), Sanjiv Sawhney studied economics as well as electrical and engineering electronics at the Institute of Technology and Science in Birla, India.
He started his career in 1992 at Citicorp Mumbai as an associate consultant in the fund accounting systems group. In 1994 he moved to Citibank, -Luxembourg, where he took the head of Application & Business Support to the fund operations. He then successively headed the fund accounting and the EMEA funds services operations.
In March 2007, Mr. Sawhney was appointed JP Morgan Bank, Luxembourg’s Managing Director, assuming the overall responsibility for all fund businesses serviced in Luxembourg. This includes custodian, fund accounting, administration, and transfer agency functions, as well as HFS Luxembourg, the newly launched branch of JPMorgan Hedge Fund Services, which specialises in hedge funds and funds of hedge funds services.
In 2005 Sanjiv Sawhney opted for Luxembourgish citizenship. A sports fan, he played for -Luxembourg’s national cricket team.
Lipper Awards: Cementing the position
Lipper will release their 2008 analysis of the Luxembourg funds industry by mid-April.
For the third year in a row JPMorgan Bank is expected to be awarded the largest custodian and fund administrator by total net assets in Luxembourg by Lipper – the UK fund information and analysis provider. In 2006 and 2007 the American Bank was awarded in both categories followed by UBS and RBC Dexia.“I would expect us to be right on the top this year as well. We would like to believe that 2008 will help us further cement our position,” Sanjiv Sawhney explains.
Founded in 1973 by Michael Lipper, the company publishes fund data and analysis through newspapers, financial publications and the Internet and provides research on more than 140,000 funds, domiciled in 45 countries, and assets in excess of ten trillion dollars.
The Lipper Fund Awards are awarded to funds in 21 countries covering Asia, Europe, and the Americas.
JPMorgan today announced that its Hedge Fund Services business has opened an office in Luxembourg to service existing and new clients, which will provide custody, administration, accounting and outsourcing services for hedge funds and funds of hedge funds.
In 2008 Lipper launches the Hedge Fund Awards, which bestow the leading hedge funds across European, offshore and North American fund domiciles.