U.S. Banking Review: Assets Under Custody Comparisons

by Trefis Team
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BNY Mellon
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Custody banks form a rather isolated group in the banking industry – something which is a direct result of the fact that they do not normally work with retail (individual) customers. After all, you wouldn’t normally find yourself going to Bank of New York Mellon (NYSE:BK) or State Street (NYSE:STT) to make a deposit or take out a loan. What separates these banking giants from other banks is that they act as custodians of assets entrusted to them by corporates and even other banks. And their main source of revenues is the fee they charge for managing these assets.

But the world’s biggest custody banks are not all purely into custody banking. Along with the two banks named earlier, diversified financial giants JPMorgan Chase (NYSE:JPM) and Citigroup (NYSE:C) complete the list of banks with the largest value of assets under custody. Quite notably, all four of these banks are based in the U.S. In this article, which is part of our continuing series on the comparison of the country’s biggest banking groups, we detail the growth in assets under custody for these four banks over the recent years.

See the full Trefis analysis for BNY MellonJPMorganState StreetCitigroup

The different types of financial institutions are compared among themselves based on metrics that are most pertinent to a particular financial service. For example, retail banks can be compared to one another on the basis of the size of deposits they hold, or their portfolio of outstanding loans. Similarly, asset managers are pitted against one another based on the size of the assets they manage. When it comes to custody banks, it is the size of the assets under their custody that matters.

The table below summarizes the size of assets under custody for each of the four biggest custody banks at the end of each quarter over the last two years. The data has been compiled using figures reported by the individual banks as part of their quarterly announcements.

(in $ billions) Q1’11 Q2’11 Q3’11 Q4’11 Q1’12 Q2’12 Q3’12 Q4’12
BNY Mellon 21,000 21,700 21,200 21,000 21,700 22,200 23,000 23,100
JPMorgan 16,619 16,945 16,250 16,870 17,868 17,665 18,219 18,835
State Street 16,692 16,789 15,714 15,863 16,912 16,387 17,287 17,806
Citigroup 13,000 13,500 12,500 12,000 12,500 12,200 12,800 13,200

There is something that needs to be clarified here, though. Unlike the other three banks, BNY Mellon adds up the total size of its assets under custody (AUC) and assets under administration (AUA) to report a single assets under custody and administration (AUC/A) figure each quarter. To allow for a side-by-side comparison, we have assumed that BNY Mellon’s AUA value remained at the current figure of $3.6 trillion over the last two years and deducted this number from the reported figure to arrive at the bank’s AUC. [1] That said, the only difference between AUC and AUA is that the AUA figure refers to the assets held by a bank in its capacity of a fund administrator, i.e. assets belonging to other funds.

As can be seen from the table, BNY Mellon tops the list by a healthy margin with over $23 trillion in assets under custody. The bank has also grown the size of its AUC by a good 10% over the last two years – no mean feat given the sheer size of its assets.

Only JPMorgan shows a better growth rate among the other banks on the list – increasing AUC values by 13% over the period. While State Street managed 6% growth, Citigroup’s AUC figure fluctuated considerably around $13 trillion most likely due to the impact of currency translation on its geographically diversified business.

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Notes:
  1. BNY Mellon Key Facts, BNY Mellon Website []
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