Growth for survival

Article Abstract:

Global custody banking has changed significantly during the 1990s. The sector has undergone consolidation, with some banks, including Citibank and Chase Manhattan Bank, emerging as major players, and other banks, including Barclays and J.P. Morgan, opting to sell their custody interests. The need for economies of scale drives the consolidation process. Industry experts estimate that major players must invest $200 million per year in technology, but the rewards are also great. Growth is over 12% per year, and experts predict that custodians could be holding assets worth $50 trillion by 2000.

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Pressure for change

Article Abstract:

Global custody services are developing strategies to suit the different emerging Asian markets. Global custodians need to get to know the individual Asian markets, including their differences from each other and from those in developed countries. The level of sophistication is not as high as in other regions, but clients are beginning to demand more services and the industry is evolving. There is no access to government debt markets, so the focus is on equity markets. Margins are higher in this region than in the developed world, but they are decreasing as competition increases.

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Onward means outward

Article Abstract:

Global custodians are finding more openings in Asia. Asian investors are increasingly following trends in the developed world, and opting to outsource their custody business. The practice prevents fund managers having to invest large sums in the systems and staff required to operate custody business. It also reduces risk and it generates additional revenue from services, including foreign exchange and the lending of securities.

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