How Much In Custody Assets Did The 5 Largest Custodians Report At The End Of Q3?

The 4 largest global custody banks reported more than $96 trillion in assets under custody and administration (AUC/A) at the end of Q3 2016 – representing a market share of over 53%.

AUC/A figures for individual banks is taken from their quarterly earnings releases

The custody banking industry has seen steady inflows since 2010, as stricter regulatory requirements have forced financial institutions around the globe to outsource a bulk of their services to custodians. However, the total size of global custody assets was under pressure over Q3 2015 – Q1 2016 as weak global equity market conditions hurt asset valuations even as the banks continued to get additional mandates from new clients over this period. Negative exchange rate movements aggravated the situation – leading the asset base sharply lower in Q3 2015 from the high seen in Q2 2015. But with equity and debt market valuations improving steadily over subsequent quarters, total AUC/A reached record levels by the end of Q3 2016.

As the custody banking business is characterized by slim operating margins, the industry is extremely concentrated, with incumbents looking to improve profitability through acquisitions in order to achieve greater economies of scale. Notably, the four largest custody banks are all based in the U.S., and are responsible for well over half the industry. While BNY Mellon and State Street are primarily focused on custody banking services to make money (with these services contributing 45-50% of their share value according to our estimates), JPMorgan and Citigroup have extremely diversified business models (with custody banking services being responsible for less than 5% of total share value).

See full Trefis analysis for BNY Mellon | State Street | JPMorgan | Citigroup

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