Joint ventures smack of timidity. So when Dutch universal bank ABN Amro joined forces with Mellon Trust in November 1998 to form a 50:50 joint venture called ABN Amro Mellon Global Securities Services, competitors caricatured the new enterprise as a marriage between a dim-witted dinosaur and a frightened minnow.

Initially, the caricature rang true: the defensive qualities of the deal were more apparent than its aggressive intent. Mellon had developed one of the finest securities processing platforms in the industry but lacked global reach, while ABN Amro had a global network but outmoded technology.

"It is valid to argue that the basis was a combination of American technology and Dutch distribution, but we have long since moved beyond defensive mode," claims Nadine Chakar, Amsterdam-based managing director of ABN Amro Mellon.

"We created a single organisation, transferred all clients on to a single platform, and now compete for mandates in markets previously closed to both of us."

Recent global custody wins include a £1.4bn mandate from Hertfordshire County Council pension fund, a £1.7bn account for the Irish Post Office fund, and a £34bn contract from ABN Amro Asset Management. But the decision by ABP, the giant Dutch civil servants' pension fund, to give ABN Amro Mellon the task of servicing £50bn of foreign assets marks its coming of age.

While the venture has new clients in France, Italy, Sweden and Switzerland as well as the Netherlands, Ms Chakar reckons her best opportunities now lie in Germany and the UK.

In the first, reforms are fostering the growth of off-balance sheet, defined contribution pension schemes. The Myners report on pensions in the UK has increased institutional interest in risk management and performance measurement tools of the kind ABN Amro Mellon supplies.

In both markets, the joint venture confines its ambitions to global rather than local custody.

"ABN Amro has reserved local business for itself, but markets its global services exclusively through us," explains Ms Chakar.

"Although the Asian and Latin American markets have no need as yet of the more sophisticated tools the joint venture can supply, we have to follow our clients," says Ms Chakar.

"Our philosophy has always been to provide them with local support and expertise wherever they are, and wherever we believe we can supply services of the requisite standard."

But transforming opportunities into new business has yet to become a habit at ABN Amro Mellon. The value of assets serviced by the joint venture has climbed from E80bn at the outset to E150bn today.

This is partly a problem of success. By allowing clients to move on to the Mellon platform at their own pace, ABN Amro Mellon lost only one important account during a transition finally completed in the spring of this year, and had no need to risk a successful transition by hunting aggressively for new business.

"We had the luxury of time," says Ms Chakar. "Clients gave us their preferred conversion timetable, and in almost every case we were able to accommodate them." Subsequent attrition, she adds, has owed more to consolidation in the banking and insurance industries than disquiet with the quality of service.

As the joint venture moves beyond the transition process, winning new business may be hampered by continuing confusion over the relationship between the two partners and the exact nature of the services on offer.

The division between the local custody services provided by ABN Amro and the global custody services provided by the joint venture is clearer to insiders than it is to outsiders.

More importantly, is ABN Amro Mellon a specialist provider of value-added services like State Street or Northern Trust or is it a volume-driven global custodian like Bank of New York?

Ms Chakar insists the division of labour between ABN Amro and ABN Amro Mellon is obvious. "We look after everything which is cross-border," she says. "It is as simple as that."

As for the business model, Ms Chakar rejects comparisons, preferring to see the joint venture as unique. "We aim to provide a global custody service, and we are committed to being a global player, but what differentiates us from other providers is our ability to blend local expertise with the power and technology of a genuinely global institution," she says.

"This business is not about mass customisation. We recognise that the needs of Swiss and British pension funds are totally different."

This ability to deliver both locally and on a global scale is best illustrated by the $1.5bn 3M pension fund global custody mandate, which ABN Amro Mellon secured in conjunction with Mellon Trust in Boston and its sister joint venture in Toronto, CIBC Mellon.

"Headquarters wanted consolidated custody, accounting and reporting services, while local subsidiaries just wanted the day-to-day settlement and safekeeping jobs done," explains Ms Chakar. "We now deliver that across 16 separate markets."

The 3M deal is proving a useful sales pitch for multinational corporate pension plans. It also testifies to the success of both ABN Amro Mellon and CIBC Mellon in suppressing the managerial and cultural tensions that plague all joint ventures.

ABN Amro Mellon had the larger task, in that its management had not only to meld two corporate cultures and three nationalities but also clear a language barrier as well.

It is unclear whether ABN Amro Mellon will eventually become completely independent, or merge with another provider so it may compete with the US global custodian banks.

"The formation of a pan-European transaction processing bank would certainly fit with the Mellon history and philosophy," concludes Ms Chakar.

"If we cannot do something ourselves, we have always sought to find the best provider in each market. Other banks are now finding they too can't conquer the world unaided."