German custodians on the New Silk Road


German custodians on the New Silk Road

Guiding investors into faster growing markets

Executive Summary

The German custody and depositary bank industry has seen transformational change, with the market massively consolidating and service providers focusing on regulatory change, improving cost efficiencies, and streamlining their organization. Service providers with a long-term strategy must now focus on innovation and become providers of knowledge and solutions. The key macroeconomic trend will be the increasing importance of Asia generally and China specifically: custodians have to set out for the New Silk Road.

The German custody and depositary banking market is seeing transformational change. More than 70 percent of the market’s €1.72 trillion in assets under custody is now consolidated with the five largest providers: BNP Paribas, J.P. Morgan, State Street, BNY Mellon, and HSBC. A considerable number of local providers have exited the market over the past 24 months. This development towards consolidation is largely the result of three key factors:

  • The regulatory paradigm change
  • Margin compression
  • Rationalization

These three factors have considerably changed the shape of the German custody market and continue to truly represent what one commentator has recently referred to as “a crackling market environment”.

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Performance magazine issue 19, January 2016

Performance is a triannual digest, dedicated to investment management professionals, which brings you the latest articles, news and market developments from Deloitte’s professionals and clients.

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