Back in 2000, LaSalle Bank’s Global Securities and Trust Services group started the hunt for a way to automate corporate action processing – the splits, buy-backs, warrants, dividends, and payouts from class action lawsuits. Market data feeds, which provide up-to-the-second information on price and volumes, often don’t carry corporate actions that may require shareholders to respond to offers by certain deadlines.

The volumes of corporate actions that LaSalle processes has grown without the need for additional staff, Kokenes said.

With more than $150 billion in discretionary and non-discretionary assets (mostly US but also including some international holdings that it handles with its parent ABN AMRO) LaSalle wanted to improve upon the mostly manual and paper intensive way it dealt with corporate actions.

“We wanted a straight-through processing solution that would eliminate many of the manual touch points,” said Veneta Kokenes, senior vice president at LaSalle. Headquartered in Chicago, the group serves individuals, small businesses, middle market companies, insurance companies, and health care organizations.

LaSalle chose Xcitek, whose XSP system runs on Microsoft technology. XSP offers data scrubbing, workflow management, Web and ISO messaging for client notification and response capture, and complete entitlement processing. The company also offers a Web-based module, eTRAN, which generates notification to intermediaries for desired elections.

“We chose Xcitek because they offered us a more robust platform,” explained Kokenes. “They were also willing to work with us on development initiatives. We are thinking prospectively that as our business grows we want the ability to expand our corporate actions processing – both in doing more with the corporate actions and handling larger volumes.”

Founded in 1986 as a data provider, Xcitek launched XSP, a Microsoft-based application, in 1996, said Brendan P. Farrell Jr., managing partner.

“We use SWIFT to notify clients, including portfolio managers, and then the clients can respond over the Web through eTRAN. We manage all the interfaces with clients’ portfolios around the world and then provide information back into their legacy systems for posting records,” he added.

The latest version of XSP allows LaSalle to take feeds from its various corporate action data vendors, process the data and interact with SunGard’s Global Plus, the securities processing and trust platform that the bank moved to last year.

“We made a major commitment to upgrade our underlying platform to multi-currency that would support the additional growth we are looking to achieve through wealth management, corporate and institutional trust, and the global securitization trust business,” said Kokenes.

Before moving to the new systems, LaSalle received much of its corporate action data in hard copy. Someone at the bank would then have to go into the securities processing system to see which clients held the affected securities. Now with XSP and Global Plus, the bank can focus on manual processing of just the exceptions, which reduces both cost and risk.

With Xcitek the bank receives its corporate action notifications into XSP overnight, links to Global Plus to determine which clients hold securities that are affected, and sends out notification to the holders by email or letter. If the return instructions are by email, the direction goes right back through electronically. XSP tallies all the responses and sends instructions along to DTCC.

“eTRAN provides the greatest STP,” said Kokenes. “This improves the response rates and turnaround is quicker, and it minimizes the time we spend compiling the results.” With less time on manual processing, the staff can focus on the investment advisors who don’t respond to get an answer from them before deadlines.

Because XSP is built on Microsoft, it integrates readily with Word and Excel to generate letters and supply data to Excel spreadsheets for exception processing reports.

“In addition,” added Kokenes, “these are formats and tools that everyone is already familiar with.” LaSalle is confident that XSP can support any volume that an expanding business can generate.

“Since 2000 when we implemented XSP we have expanded the volumes we are processing with no addition to staff,” said Kokenes. “As we look at larger asset portfolios and hope to attract those investment managers to our organization, this puts us in a stronger position.”

Xcitek was one of the first Windows-based applications for financial services institutions, said Farrell, though the application runs on either SQL Server or Sybase databases.

“Today we are moving to .NET. We looked at offering Xcitek on Linux too, but we discovered the cost of writing it again was very high. The Wintel solution is still the best value for money,” he said. “In back-office operations centers that we support, they may use Sun, Unix and mainframes, but when they want to automate areas tied to an expense center, and when they require multiple computers and operating systems, it is very expensive to do that in Unix.”

Xcitek also uses historical records of corporate actions to offer Client Cost Basis, which can take a few simple inputs on equities and calculate the effects of splits, distributions, spin-offs, mergers and even dividend reinvestment plans going as far back as 1990. This provides clients with immediate answers at tax filing deadlines, when they are often scrambling to calculate their liabilities.

“No institution maintains cost basis on 100 percent of the positions in client accounts,” said Joseph Carvalhido, managing partner at Xcitek. “That leaves the vast majority of clients without access to this critical information, and the task of researching the position falls to the broker or advisor. Not only does this product make the research easy, but it goes to the next step of enabling the client to do it themselves,” he said.

www.xcitek.com

www.lasallebank.com