[ U P D A T E ]
Fund services wins prop up stagnant custody revenues for the world ’ s largest asset servicers
Revenue data for 2021 paints a familiar picture for custody revenues , while the growth story is all about fund services in a marginal recovery year for custodians .
Fund services revenues rose by 7 % to $ 11 billion among the top dozen custodians during 2021 , offsetting another year of flat custody income in what continues to be a low margin business . The more lucrative area of asset servicing has benefited from a rise in investment in private assets , additional outsourcing and the continuing emergence of ETF administration over the 12-month period . The data released by Coalition Greenwich compiled the annual revenues from BNY Mellon , State Street , Citi , JP Morgan , Northern Trust , BNP Paribas , Brown Brothers Harriman , CACEIS , Societe Generale , HSBC , Deutsche Bank and RBC . Overall , custodians will be pleased to see their revenues across all securities services rise for the first time year-on-year since 2018 . Combined custody and fund services were 2 % higher than in 2020 , breaking a run of back-to-back declines . Custody revenues came in at $ 18.2 billion for the year , 1 % up from 2020 due to strength in transaction volumes , but remained significantly lower than 2018 and 2019 . The custody business continues to be hampered by pricing pressures , low interest rates and mounting client demands , in an area which is becoming increasingly commoditised . Despite an ongoing dramatic increase in assets under custody and administration with each passing year , revenues are not benefitting in parallel . Coalition Greenwich also publishes a revenue productivity chart alongside the data it compiles where it has tracked a continued decline since 1Q16 . Aware of the pressures on their business models , the largest custodians are aiming to change their fortunes through front-toback offerings , data , capitalising on the emergence of digital assets and new technologies . In a business that requires scale and significant investment in technology , the pressure is stacking up on some midtier securities services providers who may be considering the long-term benefits of running a global custody operation . In September 2021 ,
State Street announced its acquisition of Brown Brothers Harriman ’ s Investor Services business in a $ 3.5 billion deal marking one of the most significant and largest securities services deals of all time .
Meanwhile we have seen various custodians step away from the business entirely or specific regions in recent years .
10 Global Custodian Fund Services Annual 2022