Two U.S. Banks to Manage NPS's 929 Trillion Won Overseas Investment Assets

State Street Bank and Bank of New York Mellon Selected as Custodians
Contracts to Be Finalized Early Next Year; Initial 3-Year Term with Possible 2-Year Extension

The National Pension Service (NPS) has selected two U.S. banks to serve as custodians for its overseas investment assets, which are expected to reach 929 trillion won by 2027. These banks will be responsible for the safekeeping, settlement, and management of these assets.

On July 3, the NPS announced that it had selected State Street Bank as the first-priority preferred negotiator and Bank of New York Mellon as the second-priority preferred negotiator for its overseas custodian services. The selection followed a process that included a public announcement in April, a business briefing, proposal evaluations, and on-site due diligence.

The overseas custodian institutions will handle the safekeeping, settlement, asset management, administrative work, and middle-office services related to the NPS Fund’s overseas investment assets.

To mitigate risks and enhance expertise in custody work, the NPS will negotiate with each preferred negotiator in order of priority, and plans to sign separate custody contracts (custody, administrative, and middle-office services) for each asset category, distinguishing between overseas equities and overseas bonds. Overseas alternative investment assets will be jointly managed by the institution responsible for overseas equities.

The NPS plans to finalize detailed technical negotiations regarding work execution with the preferred negotiators and conclude the final contracts by early next year. The basic contract period will be three years, with the possibility of a two-year extension based on performance evaluations.

As of the end of April this year, the NPS fund stood at 1,670.7 trillion won, with 55.7% invested overseas. By asset class, overseas equities amounted to 604.5 trillion won, overseas bonds to 103.1 trillion won, and overseas alternative investments to 221.4 trillion won.

Sungjoo Kim, Chairman of the NPS, stated, "As the proportion of overseas investments in the fund continues to expand, a stable custody infrastructure is a core foundation of fund management. By collaborating with institutions that possess global-level custody capabilities, we will ensure that asset safekeeping and settlement are carried out seamlessly, with zero margin for error."

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