State Street Will Fall Behind JPMorgan In Terms Of Custody Assets Soon Despite Strong Recent Growth
State Street reported the fastest growth in custody assets among the world’s four largest custody banks between Q1 2016 and Q1 2017, with these assets swelling 8.3% over this period. This compares with y-o-y growth rates of under 6% for BNY Mellon and JPMorgan. This has helped State Street increase the gap in custody asset bases between it and JPMorgan from around $500 billion in Q1 2016 to $1.1 trillion now. But BlackRock’s decision to shift custody of $1 trillion of its ETF assets from State Street to JPMorgan earlier this year will reverse the gap in Q2 or Q3 – pushing State Street to the third position in this list.
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. After weak market conditions and negative exchange rate movements dragged down asset valuation over the beginning of 2016, the situation improved sharply in the second half of 2016 – especially after November – driving the total size of assets under custody for all these banks considerably higher. With the U.S. economy looking strong, the industry is expected to report steady grow in the near future.
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