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WIKI ANALYSIS
Northern Trust Corporation (NYSE: NTRS) is a financial holding company that provides investment management services, fund administration, and banking and fiduciary solutions.[1] Northern's largest segments are Corporate and Institutional Services and Personal Financial Services, but its other two segments are broken down into Northern Trust Global Investments and Operations and Technology.[2] Its primary operations are located in the United States, but it has 16 international locations in North America, Europe, the Asia Pacific region, and the Middle East. As a fee-based private bank, Northern's operations a significantly exposed to market fluctuations and the global economy.[3]
Business Growth
Northern's foreign offices have the potential of helping the Company win foreign business, increasing its asset-servicing revenues, and being a key contributor the Company's growth.[4] Northern has also grown its revenues from capturing more clients or client revenues. In late 2010, Northern acquired Waterline Partners, LLC.[5]
Trends and Forces
Fee-based business model is susceptible to economic swings and client retention
Northern's makes a majority on its income from trust, investment, and servicing fees.Because revenues are tied to the fees Northern reaps from assets under management, the Company's financial performance partially depends on fund inflows as well as client retention.[6] Both of those dependencies can fluctuate with sharp changes economic conditions or client sentiment. In addition, fees are also based on the market value of assets held in custody.[7]
By focusing primarily on wealth management and related services to affluent clients, Northern Trust has developed an excellent reputation in the private banking industry.[8] Northern's reputation has helped the Company retain its clients better despite economic downturns and competition.[9]
Northern aims to increase its presence abroad
A key business growth opportunity has been Northern's foreign-based operations.[10] The Company has grown its foreign operations through new hiring abroad in Europe and Asia. In China, Northern's branches were given a regulatory designated that has the potential of attracting more client.[11]
As the Company expands its operations abroad, it also faces increased risks.[12] With more foreign clients, Northern's operations have the potential of being more exposed to fluctuation in foreign exchange rates. In addition, Northern faces increased regulatory and political risks.[13]
Competition
The corporation maintains its competitive advantage by focusing on established institutions and affluent individuals. Northern Trust is one of a few bank holding companies in the United States to generate most of its revenue from fee-based services. [14]
Competitors
- State Street Corporation (STT)
- Bank of New York Mellon Corporation (BK):
- J P Morgan Chase (JPM)
- Bank of America
- Goldman Sachs
References
- ↑ Reuters: Northern Trust Company Profile, May 2011
- ↑ Reuters: Northern Trust Company Profile, May 2011
- ↑ Reuters: Northern Trust Company Profile, May 2011
- ↑ Northern Trust Profile, Waterline Partners Acquisition, December 2010
- ↑ Northern Trust Profile, Waterline Partners Acquisition, December 2010
- ↑ Northern Trust 2010 Annual Report
- ↑ Northern Trust 2010 Annual Report
- ↑ Northern Trust 2010 Annual Report
- ↑ Northern Trust 2010 Annual Report
- ↑ Northern Trust 2010 Annual Report
- ↑ Northern Trust 2010 Annual Report
- ↑ Northern Trust 2010 Annual Report
- ↑ Northern Trust 2010 Annual Report
- ↑ NTRS 2007 10-K, Item 1: Business, page 4
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