Asset manager BlackRock Inc (BLK.N) is adding Bank of New York Mellon Corp (BK.N), Citigroup Inc (C.N) and JPMorgan Chase & Co (JPM.N) as custodians for its $2.3 trillion U.S. iShares exchange-traded funds, diversifying beyond long-time partner State Street Corp (STT.N). The world"s largest asset manager is also expected to add new service providers next year for the Ireland-based book of business for iShares. BlackRock"s decision to add custodians was telegraphed earlier, and State Street acknowledged in February that the company intended to move a "significant portion" of its ETF assets to other providers to diversify. The business State Street expected to move represented about 1.5% of its fee revenue, or roughly $140 million. BlackRock said Citigroup will care for about 40% of the funds while JPMorgan handles 30% and BNY Mellon and State Street each take 15%. BlackRock"s iShares are the largest provider of ETFs with some $3 trillion in assets. Its decision to add more service providers underscores the surging popularity of ETFs. Assets in iShares, for example, have grown by roughly $1 trillion during the pandemic as investors poured record amounts of money into financial markets. The growth has made servicing these assets, a low-margin business that includes holding assets and processing trades, more attractive for banks, prompting more of them to try to get bigger pieces of the market. Competition has pushed down fees and could cut costs for consumers. State Street said in a statement it will continue to provide services to iShares and "a diverse set of BlackRock funds." Citigroup and JPMorgan said BlackRock"s move endorsed their businesses. JPMorgan"s business has grown to more than $32 trillion of assets under custody from $20.5 trillion in 2016. Roman Regelman, BNY Mellon’s chief executive of asset servicing and head of digital, said BlackRock’s move to add service providers is positive for the industry because it adds resiliency, encourages transparency and promotes innovation. Regelman said he was optimistic BNY Mellon would become a service provider for a substantial portion of the iShares’ European business to be awarded next year. That business, he said, has higher margins than the U.S. work. "We already have a proposal in," he said, adding that he expected BlackRock to add fewer partners in Europe than it did in the United States. Reporting by David Henry; Editing by Paritosh Bansal, Cynthia Osterman and Lincoln Feast. Our Standards: The Thomson Reuters Trust Principles.