GC Spring 2021 | Page 21

“ We still haven ' t come to a compelling reason to migrate to one and only one T2S provider .”
[ I N D E P T H | S U B - C U S T O D Y ]

“ We still haven ' t come to a compelling reason to migrate to one and only one T2S provider .”

sense ,” says Kreuzmair , “ but where we do have a direct connection , there is no software emulation . It ' s the same staff and the same system that are providing the processing . And at the same time , we have our local offering because we still have local clients , so corporate action information , market intelligence , and lobbying , for example , are predominantly local .” Andy Osborne , senior vice president and network manager for Northern Trust ’ s global custody business believes there are other market forces at play in the winnowing of agent bank services . “ I ' m not sure you can easily make a distinction between push and pull , to be honest ,” he says , citing the example of BHF Bank in Germany , which he describes as the first custodian of note to exit the industry back in 1996 . “ That came as a shock , because they were the go-to sub-custodian in Germany . So we all sat back and thought , ‘ Hang on . What ' s happened here ?’
HARALD KREUZMAIR , DIVISION HEAD GLOBAL INVESTOR SERVICES , RAIFFEISEN BANK INTERNATIONAL
When we spoke to one of our trusted contacts at BHF , they said , ‘ Take a look at the industry pressures : increasing costs , decreasing margins , limited opportunity to sell to global custodians to make up for the reducing margins .’ We had to look for an alternative provider and we ' ve seen that situation repeat at the local market level since then , on and off . I think Dresdner Bank was a great beneficiary of BHF ’ s exit , but then they themselves exited the business in 2004 .” In addition to cost pressures , Osborne suggests the advantages that used to exist with single market providers have eroded over time . “ Even in terms of market presence , market advocacy and connectivity , a lot of that is done now through local market custodial associations ,” he observes .
He stresses , however , that not all banks that have exited the sub-custody business have necessarily been single market providers . “ This has been a global phenomenon ,” he says . “ We ' ve seen two regional providers , Handelsbanken last year and Nordea this year , exiting the business for the same reasons that single market providers have cited , and smaller regional
Spring 2021 globalcustodian . com 21