Largest Custody Banks Saw Their Custody Asset Base Swell Almost 7% Between Q1 2016 and Q1 2017

The 4 largest global custody banks had more than $103 trillion in assets under custody and administration (AUC/A) at the end of Q1 2017 – representing a healthy 7% jump from the figure a year ago.

AUC/A figures for individual banks are taken from their quarterly earnings releases. While BNY Mellon reports only total AUC/A figures as a part of its quarterly earnings, JPMorgan and Citigroup exclude assets under administration (AUA) from their reporting – providing only AUC numbers. State Street details its AUC/A as well as AUC figures at the end of each quarter. The table above assumes that JPMorgan had $4 trillion in assets under administration in both quarters. ^[1] The AUA figure for Citigroup is taken as $1.6 trillion. ^[2]

Removing BNY Mellon’s approximately $3.5 trillion in AUA from the figures above, and using the reported AUC figures for the other banks, we estimate the market shares of these custodians as:

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 nearly 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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1. Assets Under Administration, fundservices.net [↩]
2. Citigroup Website [↩]