A custodian bank, or simply custodian, is a specialized financial institution responsible for providing securities services. It provides post-trade services and solutions for asset owners, asset managers, banks and broker-dealers. It is not engaged in "traditional" commercial or consumer/retail banking like lending.
Custodian banks provides a wide range of value-adding or cost-saving financial services, ranging from fund administration to transfer agency, from securities lending to trustee services.
Definition
Custodian banks are often referred to as global custodians if they safe keep assets for their clients in multiple jurisdictions around the world, using their own local branches or other local custodian banks ("sub-custodian" or "agent banks") with which they contract to be in their "global network" in each market to hold accounts for their respective clients. Assets held in such a manner are typically owned by larger institutional firms with a considerable number of investments such as banks, insurance companies, mutual funds, hedge funds and pension funds.[1]
History
Early history
In 1961, U.S. President John F. Kennedy established a Committee on Corporate Pension Plans.[2] Two years later, Studebaker Auto Manufacturer shuttered its business and operations, and it failed to provide pensions to the approximately 7,000 employees affected. Hence, in 1974, U.S. President Gerald Ford proposed an Employee Retirement Income Security Act (ERISA Act), protecting the employee benefit plans' standards.[3]
Since the Act has become effective, employers could not hold and keep their pension fund assets. Instead, they are obligated to appoint external custodians to safekeep the assets.[4] Also, they are required to appoint trustees and depositories to ensure the pension funds are operated in the best interest of the pension holders and aligned to the investment mandates.[5]
Further developments
Banks have developed a wide range of custody and related services (securities services), and have been developing new technologies (e.g. blockchain, API, distributed ledger) and aligning with the fast-moving regulatory requirement, such as digital assets.[6][7]
Client segments and products
The securities services industry mainly serves two types of clients: 1) Asset Owners & Managers and 2) Banks, Brokers & Dealers.
Asset owners and managers
The client segment of Asset Owners & Managers includes asset management companies, alternative asset managers, insurance companies, pension funds, sovereign wealth funds, central banks, family offices and prime brokers.[8]
Banks, brokers and dealers
The client segment of banks, brokers and dealers includes global custodians, banks, brokers and dealers.[8]
The bank may offer the following products and services:[12]
Importance of custodian
Using US definitions, a person who owns street name securities and who is not a member of an exchange holds the securities through a registration chain which involves one or more custodians.[16] This is due to the perceived impracticality of registering traded securities in the name of each individual holder; instead, the custodian or custodians are registered as the holders and hold the securities in a fiduciary arrangement for the ultimate security holders. However, the ultimate security holders are still the legal owners of the securities. They are not merely beneficiaries of the custodian as a trustee. The custodian does not become at any point the owner of the securities, but is only a part of the registration chain linking the owners to the securities. Global securities safekeeping practices vary substantially, with markets such as the UK, Australia and South Africa encouraging designated securities accounts in order to permit shareholder identification by companies.
The definition of shareholder is generally upheld by corporate law rather than securities law.[17] One role of custodians (which may or may not be enforced by securities regulation) is to facilitate the exercise of share ownership rights, for example and processing dividends and other payments, corporate actions, the proceeds of a stock split or a reverse stock split, the ability to vote in the company's annual general meeting (AGM), information and reports sent from the company and so forth. The extent to which such services are offered are a function of the client agreement together with relevant market rules, regulations and laws.
Industry profile
Industry size
As of end-2023, the market size (as measured by worldwide client assets under custody and/or administration) amounted to some $230 trillion. The market share of the largest global custodians has varied quite dramatically over the past 25 years[18]
As of 2022, the market size (as measured by revenue) of the Custody, Asset & Securities Services industry in the US is $32.5bn, with a YoY 2.9% growth between 2017 and 2022.[19]
Industry players
Many investment banks and banks offer securities services. Generally, the division of securities services is either grouped with Global Markets to form a larger umbrella of Markets & Securities Services (MSS) or falls under the umbrella of Corporate Banking or Transaction Banking.
For instance, Citi and HSBC restructured and combined their Global Markets and Securities Services divisions in 2019[20] and 2020[21] respectively.
Players include (in alphabetical order):[22]
- 🇫🇷 BNP Paribas: Securities Services
- 🇺🇸 BNY: Securities Services
- 🇺🇸 Citi: Markets & Securities Services
- 🇫🇷 Crédit Agricole: CACEIS Investor Services
- 🇩🇪 Deutsche Bank: Corporate Banking
- HSBC: Markets & Securities Services
- 🇺🇸 J.P. Morgan: Markets & Securities Services
- 🇯🇵 Mizuho: Institutional Services
- 🇺🇸 Morgan Stanley: Fund Services
- 🇯🇵 MUFG: Investor Services
- 🇺🇸 Northern Trust: Asset Servicing
- 🇨🇦 Royal Bank of Canada: Investor & Treasury Services
- 🇯🇵 SMBC: Custody and Securities Services
- 🇫🇷 Société Générale: Global Markets and Investor Services
- Standard Chartered: Financial Markets
- 🇺🇸 State Street: Asset Servicing
Industry ranking
Global
According to the Asset under Custody League Table as of Q4 2025 [23] by Global Custodian, custodian banks' assets under custody and/or administration (AUC/AUA) are:
Regional
According to the Global Custody Survey 2020 by Global Investor Group, the top custody regional players are:[24]
Notable industry acquisitions
2000 to 2010
In November 2002, State Street announced that it had acquired global custody business with assets under custody of approximately €2.2 trillion of Deutsche Bank's Global Securities Services (GSS) business for $1.5 billion, subject to adjustment.[25]
In July 2003, HSBC announced the agreement to acquire 82.19% of Korean fund administrator Asset Management Technology (AM TeK) for $12.47 million in cash, which was the biggest fund administrator in South Korea, with $24 billion of assets under administration.[26]
In August 2003, U.S. Bancorp acquired corporate trust business of State Street for $725 million.[27]
In October 2004, Citi acquired ABN AMRO's direct custody, securities clearing, and fund services businesses in selected European and Asian markets for around $50 million.[28]
In November 2005, U.S. Bancorp announced that it was purchasing the corporate trust and institutional custody businesses of Wachovia Corporation.[29]
In July 2006, HSBC announced that it was acquiring Westpac sub-custody operations in Australia and New Zealand for $112.5 million, making the British bank the leading sub-custody and clearing player in Australia and New Zealand.[30]
In July 2007, the merger between Bank of New York and Mellon Financial Corporation had been finalised to create BNY Mellon, which is the largest custodian and asset servicer with more than $18trn in assets under custody and administration at that time.[31]
In July 2007, State Street confirmed that it was acquiring Investors Financial Services for $4.2 billion.[32]
Also in July 2007, the French bank BNP Paribas announced an acquisition of a minority stake of 33.4% in the capital of SLIB, which had been a 100% subsidiary of Natixis prior to the acquisition.[33]
In November 2009, J.P. Morgan Chase acquired ANZ's custodian services business, including access to more than 100 clients and US$90.71 billion in assets under custody.[34]
In April 2010, Standard Chartered acquired Barclays African custody business, which had assets under custody of $3.8 billion.[35]
One month later, in May 2010, State Street announced the completion of its acquisition of Intesa Sanpaolo's Securities Services business (ISPSS) for €1.28 billion in cash.[36]
2011 to 2020
In April 2013, Citi announced that it was acquiring ING Group's Custody and Securities Services Business in Central and Eastern Europe with €110 Billion in assets under custody.[37] In the same month, Standard Chartered acquired custody business in South Africa from Absa Bank.[38]
In February 2018, Butterfield Bank announced that it was purchasing Deutsche Bank's Global Trust Solutions business in the Cayman Islands, Jersey and Guernsey.[39]
In March 2020, Citi announced that it was buying Royal Bank of Canada's custody business in Australia.[40]
Since 2021
In January 2021, U.S. Bancorp acquired the debt servicing and securities custody services client portfolio of MUFG Union Bank, with approximately 600 client relationships and $320 billion in assets under custody and administration.[41]
In September 2021, State Street announced that it was acquiring Brown Brothers Harriman's Investor Services business, including its custody, accounting, fund administration, global markets and technology services, for $3.5 billion in cash.[42] However, in November 2022, State Street and BBH announced the termination of this transaction.[43]
In January 2022, Standard Chartered announced an agreement to acquire 100% ownership of RBC Investor Services Trust Hong Kong Limited from RBC Investor & Treasury Services, expanding its custodian business to MPF and ORSO schemes trusteeship business in Hong Kong.[44]
In July 2023, CACEIS, previously jointly owned by Crédit Agricole and Banco Santander at that time, purchased RBC Investor Services' activities in Europe. The acquisition expanded CACEIS's geographic footprint in Europe and included an operations centre in Malaysia with over 1,200 staff. Following the acquisition, CACEIS provided custody for approximately €5 trillion in client assets.[45]
In November 2023, HSBC agreed to sell its hedge fund administration business in several markets, including Hong Kong, Singapore, Ireland, and Luxembourg to BNP Paribas’ Securities Services. [46]
In December 2024, Crédit Agricole agreed to buy Banco Santander's 30.5% stake in custody and asset servicing entity CACEIS, giving the French lender full control of the business. The transaction, expected to complete in 2025, excludes CACEIS's Latin American joint venture, which remains jointly controlled. Credit Agricole had previously expanded its asset servicing business with the acquisition of RBC Investor Services' operations in 2023.[47]
In June 2025, Huntington Bancshares announced the divestiture of its corporate trust and institutional custody business to Argent Institutional Trust Company (AITC). Post-transaction, AITC is responsible for more than $175 billion in client assets.[48]
In June 2025, BNP Paribas Securities Services agreed to acquire the custody and depositary bank business of HSBC Germany. Implementation is expected to begin in early 2026 through a phased client migration.[49] In July 2025, HSBC has announced the sales of its fund administration business in Germany, i.e. Internationale Kapitalanlagegesellschaft (INKA), to a fund managed by BlackFin Capital Partners.[50]
In October 2025, State Street Corporation completed its acquisition of Mizuho Financial Group's global custody and related businesses outside Japan, representing approximately $580 billion in assets under custody and $24 billion in assets under administration. The deal includes Mizuho's offshore securities services in Luxembourg, the Cayman Islands, and the Bahamas. [51][52]
Self-directed retirement account custodians (US)
According to the Internal Revenue Code (IRC) in the US, various retirement accounts such as: Traditional IRAs, Roth IRA, SEP IRA, or 401k plan accounts require that a qualified trustee, or custodian, hold IRA assets on behalf of the IRA owner. The trustee/custodian provides custody of the assets, processes all transactions, maintains other records pertaining to them, files the required IRS reports, issues client statements, helps clients understand the rules and regulations pertaining to certain prohibited transactions, and performs other administrative duties on behalf of the self-directed retirement account owner.
Self-directed retirement account custodians (also known as "self-directed IRA custodians" or "self-directed 401k custodians") should not be confused with a custodian bank, which strictly provides safekeeping for securities. While a self-directed retirement account custodian can provide custody for securities, typically it will specialize in non-security assets, or alternative investments. Examples of alternative investments would be: Real Estate, precious metals, private mortgages, private company stock, oil and gas LPs, horses, and intellectual property. These types of assets require a specialization on the part of the custodian due to the complexity of the documentation required to keep the alternative investments in compliance with the IRC.
Mutual fund custodian
A mutual fund custodian refers typically to a custodian bank or trust company (a special type of financial institution regulated like a "bank"), or similar financial institution responsible for holding and safeguarding the securities owned by a mutual fund. A mutual fund's custodian may also act as one or more service agents for the mutual fund such as being the fund accountant, administrator and/or transfer agent which maintains shareholder records and disburses periodic dividends or capital gains, if any, distributed by the fund. The vast majority of funds use a third party custodian as required by SEC regulation to avoid complex rules and requirements about self-custody.
A mutual fund retirement account (IRA, SEP etc.) custodian, however, refers to the plan administrator and recordkeeper such as noted above, which may not necessarily be the same institution providing custody services to the investments of the overall fund.
See also
Further reading
References
- David Loader. Clearing, Settlement, and Custody Butterworth‑Heinemann (Elsevier), 2020^
- Erisa 40 Timeline Alternate U.S. Department of Labor, retrieved January 25, 2022^
- President Ford Signing ERISA of 1974 Pension Benefit Guaranty Corporation, retrieved April 27, 2017^
- Investment Company Act of 1940 US Government, retrieved May 13, 2021^
- Investor Bulletin: Custody of Your Investment Assets U.S. Securities and Exchange Commission, retrieved December 6, 2021^
- The evolution of a core financial service - Custodian & Depositary Banks Deloitte, retrieved January 1, 2019^
- Summary and Highlights: The Securities Services Industry in the 'New' World Future of Finance, retrieved November 11, 2021^
- The Custody Services of Banks Davis Polk, The Clearing House, retrieved July 28, 2016^
- Securities Services: The Good Times Are Over, It Is Time To Act Oliver Wyman, David Maya, Hugues Bessiere, retrieved June 1, 2015^
- Sectors explained: Global Custody eFinancialCareers, September 2013, retrieved September 1, 2013^
- A practical 10-step guide to collateral management IHS Markit, CloudMargin, retrieved June 1, 2017^
- Securities Services: The Good Times Are Over, It Is Time To Act Oliver Wyman, David Maya, Hugues Bessiere, retrieved June 1, 2015^
- SUB-CUSTODY: You'll miss us when we're gone Funds Europe, retrieved October 1, 2015^
- Third Party Clearing by HKSCC General Clearing Participants HKEX^
- Scott Rob. How to succeed in the new post-trade services landscape: Reduce risks, cut costs and get closer to clients Journal of Securities Operations & Custody, 2010^
- Holding Your Securities U.S. Securities and Exchange Commission, 12 July 2023, retrieved 2026-01-21^
- James J. Park. Reassessing the Distinction between Corporate and Securities Law UCLA Law Review, Social Science Research Network, 2017^
- Assets under Custody markets share trends globalcustody.net, ServiceMatrix Ltd, retrieved May 23, 2024^
- Custody, Asset & Securities Services in the US - Market Size 2003–2027 IBISWorld, retrieved February 9, 2022^
- Citi combines equities, prime brokerage and securities services units The Trade, Joe Parsons, 30 July 2019, retrieved March 5, 2020^
- HSBC combines markets and securities services divisions in major restructure The Trade, Joe Parsons, retrieved July 30, 2019^
- Custodians By Assets Under Custody (AUC) TAB Financial Markets, The Asian Banker, retrieved December 31, 2010^
- Custodians by assets under custody and administration Global Custodian, retrieved Aug 6, 2022^
- Global Custody Survey 2020 September 30, 2020, retrieved September 30, 2020^
- State Street Confirms Purchase Of Deutsche GSS Assets Global Custodian, retrieved November 5, 2002^
- HSBC acquires Korea fund administrator Asian Investor, retrieved July 2, 2003^
- U.S. Bank to Acquire State Street's Corporate Trust Business Business Wire, August 13, 2002^
- Citi acquires ABN Amro's custody business for around $50 mn Economic Times, retrieved October 19, 2004^
- U.S. Bank to Acquire the Corporate Trust and Institutional Custody Business from Wachovia US Bank, retrieved November 29, 2005^
- HSBC To Pay Up To US$112.5 Million For Westpac Sub-Custody Operations In Australia And New Zealand Global Custodian, retrieved July 27, 2006^
- Custody industry consolidates IPE, Heather Mckenzie, retrieved September 1, 2007^
- State Street finalises takeover Irish Examiner, Niamh Hennessy, 3 July 2007, retrieved July 3, 2007^
- BNP Paribas to take a minority interest in SLIB BNP Paribas, retrieved July 17, 2007^
- J.P. Morgan acquires ANZ's custodian services business Asia Asset Management, retrieved November 20, 2009^
- Standard Chartered Buys Barclays African Custody Business Global Custodian, retrieved April 27, 2010^
- State Street acquires Intesa Sanpaolo's Securities Services business Securities Finance Times, retrieved May 17, 2010^
- Citi to Acquire ING's Custody and Securities Services Business in Central and Eastern Europe with €110 Billion in Assets Under Custody Citi, retrieved April 26, 2013^
- Standard Chartered acquires custody business in South Africa from Absa Bank Private Banker International, retrieved April 19, 2013^
- Butterfield to acquire Deutsche's banking, custody biz in Cayman, Channel Islands Helen Burggrafc, retrieved February 19, 2018^
- Citi buys Royal Bank of Canada's custody business in Australia Asia Asset Management, retrieved March 18, 2020^
- U.S. Bancorp buying large custody book from MUFG Union Bank Asia Asset Management, retrieved January 6, 2021^
- State Street to Acquire Brown Brothers Harriman Investor Services Brown Brothers Harriman, retrieved September 7, 2021^
- Bhanvi Satija, Mehnaz Yasmin, Bhanvi Satija. State Street terminates $3.5 bln deal for Brown Brothers unit Reuters, 30 November 2022, retrieved November 30, 2022^
- Standard Chartered signs agreement to acquire RBC Investor & Treasury Services' trustee and domestic asset services business in Hong Kong Standard Chartered, retrieved January 12, 2022^
- CACEIS – industry consolidator and key servicing partner for global markets CACEIS, 6 June 2024^
- BNP Paribas to acquire HSBC’s hedge fund admin business Hedge Week, 22 November 2023^
- Credit Agricole buys remainder of Caceis custody and asset JV from Santander Reuters, 20 December 2024^
- Argent Institutional Trust Company to acquire corporate trust and institutional custody business from Huntington Bank Argent Financial Group, 6 June 2025^
- BNP Paribas to acquire HSBC's custody and depositary business in Germany Retuers, 28 June 2025^
- HSBC to divest INKA fund administration business to BlackFin Retuers, 14 July 2025^
- State Street completes buying Mizuho's global securities services businesses Asia Asset Management, 2 October 2025^
- State Street to acquire Mizuho Financial Group's global custody business Business Wire, 28 February 2025^