How Have Custody Assets For The World’s Largest Custody Banks Changed In The Last Five Quarters?

Global custodians have reported significant fluctuations in the size of their assets under custody/administration (AUC/A) over the last five quarters. They reached peak levels at the end of Q2 2015, before largely shrinking over the next three quarters due to weak equity market conditions globally. Negative exchange rate movements were responsible for the unusually low figure in Q3 2015. But with equity and debt market valuations improving over Q2 2016, each of the 4 largest custody banks saw their asset base increase quarter-on-quarter.

Estimates for the market share of the largest custodians in terms of total custody assets can be found here.

The custody banking industry has seen steady inflows over recent years, 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. A sharp recovery in asset valuation in Q2 helped total custody assets recover to just shy of the record levels seen in mid-2015.

Notably, State Street had the most assets under custody among all global custodians in Q2 2015 as a result of its strong presence in Europe. But with the U.S. dollar strengthening considerably since then, the bank has seen its asset base shrink in dollar terms. As exchange rate stabilize, and as State Street continues to win additional mandates over coming quarters, we expect the size of its assets under custody to grow at a steady rate as shown in the chart below.

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

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