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Subcustodians nurture growth in turbulent markets
Announcing the winners of the Best Subcustodian Awards as part of The Asset Triple A Sustainable Investing Awards for Institutional Investor, ETF, and Asset Servicing Providers 2022
The Asset 16 Aug 2022

Despite the adverse impact of the pandemic and other market challenges, subcustodians experienced sustained growth in assets and transaction volumes across almost all markets in 2021.

The number of mandates also increased substantially, with one major global custodian switching providers for its subcustody mandate, a rare occurrence in the global custody space, across a number of markets, thus changing the dynamics in some of these markets.

Increasing connectivity and digitalization have supported subcustodians, who remain at the forefront of using technology in various areas of asset servicing.

Client servicing has also become more crucial based on feedback from client calls and an in-house survey conducted by The Asset.

It is in this context that The Asset board of editors announces the winners of the Best Subcustodian Awards for North Asia, Asean/Australia, Middle East, and South Asia as part of The Asset Triple A Sustainable Investing Awards for Institutional Investor, ETF, and Asset Servicing Providers 2022.

The results for the Best Asset Servicing in China will be announced separately.

BEST SUBCUSTODIAN, NORTH ASIA

Hong Kong

HSBC – Winner

HSBC remains the go-to subcustodian in Hong Kong with local stocks accounting for 45% of the cross-border assets under custody (AUC). Hong Kong also accounts for more than 30% of the bank’s Stock Connect portfolio and 26% of the transaction volume during the awards period.

Citi – Highly Commended

Citi Hong Kong achieved a record-high US$1.9 billion in AUC in 2021 as a direct result of winning multiple new key origination mandates for custody and fund services, direct custody and clearing, and fund accounting services together with the incremental flow from existing key clients.

Japan

HSBC

HSBC saw its AUC in Japan hit a historical high of over US$1 trillion for the first time during the awards period. This resulted from a combination of new client onboarding and the organic growth of its intermediary clients.

South Korea

HSBC remains one of the largest subcustodians in Korea, with a 45% market share in equities and 23% market share in fixed income during the awards period. It successfully onboarded incremental assets from existing clients.

Taiwan

Citi Winner

Citi Taiwan ranked first among foreign banks in terms of AUC. It has received top ratings in various industry surveys for years based on its focus on global custodians, foreign broker-dealers, foreign sovereign funds and other global asset owner clients. In the domestic client segment, Citi Taiwan services all of the top 10 insurance clients, providing custody-related services such as asset servicing, FX, settlement and clearing.

Standard Chartered Highly Commended

Standard Chartered achieved a 24% growth in AUC during the review period, outperforming Taiwan’s benchmark index, which saw a 23% rise, despite the challenging market. Its strong automated system capabilities enabled the bank to post the highest volume of corporate actions (up 170%) and FX transactions (up 129%) in the market.

BEST SUBCUSTODIAN, ASEAN/AUSTRALIA

Australia

HSBC continues to grow its business in Australia despite the challenging market environment. It posted a 36% growth in AUC over the last five years, a 98% straight-through processing (STP) rate, and a 96.3% settlement success rate.

Indonesia

HSBC successfully retained a key major global custodian mandate in 2021, while maintaining a large base of diversified clients. It cornered the largest market share of 46% of the total foreign-invested assets in the Indonesian Central Securities Depository (KSEI) by winning a number of key mandates from major global financial institutions, including major broker-dealer and global custodian clients, which consolidated their assets from multiple foreign custodian banks to HSBC.

Standard Chartered – Highly Commended

Standard Chartered posted a 107% growth in AUC and won a subcustody mandate previously awarded to a competitor by one of the largest global custodians. It captured market share from competitors and won sizeable mandates in cross-border and domestic segments.

Malaysia

Standard Chartered – Winner

Standard Chartered posted a 25% growth in AUC and a 20% growth in fund services in 2021. The bank secured all new funds launched by the third-largest insurer in Malaysia. It also won key mandates from insurance companies, Islamic finance entities, and asset management companies from competitors, while retaining all existing mandates.

Deutsche Bank – Highly Commended

Deutsche Bank began to roll out the first few phases of its new securities services system – known as S2 – to further automate its post-trade processing capabilities in 2021. S2 aims to automate all manual cash processes related to securities services, including clients’ payments to Bursa Malaysia, thereby reducing business risks.

Philippines

Standard Chartered

Standard Chartered posted a 75% growth in AUC, outperforming the market. It won a subcustody mandate from a leading global custodian bank as well as a custody and fund services mandate from a top non-bank asset manager that holds a significant market share in trusts, investment accounts and mutual funds.

Singapore

DBS – Winner

DBS remains the dominant subcustodian in Singapore with the highest AUC. Helped by new mandates won in 2021, the bank has been settling 15,000 trades a day on average. This has cemented its status as the number one custodian in the market, not just based on AUC but also by transaction volume.

Standard Chartered – Highly Commended

Standard Chartered outperformed the market in 2021, recording 21% growth in AUC against the 5.27% rise in the Singapore benchmark. It won a key mandate from one of the world’s largest custodians and various mandates across the insurance, broker-dealer and investor segments.

Thailand

HSBC Thailand has one of the largest market shares in the foreign custody business with AUC of around 45% for equities and bonds. In 2021, transaction volumes rose 100% as a result of asset transitions from international broker-dealer clients and organic growth in direct custody and clearing business from existing clients.

Standard Chartered posted a robust 20% growth in AUC, winning 38 new mutual fund mandates. It also won two key mandates previously awarded to a competitor by a top global custodian to become its sole subcustodian, and another one from a top Swiss private bank.

Vietnam

HSBC received a mandate with AUC of US$1.6 billion from a leading insurance company, which was previously awarded to another custodian bank, becoming the sole securities services provider for the client, and servicing its general account, unit-linked funds and open-ended funds. The bank clinched the deal after displaying the flexibility of its documentation onboarding process and the innovation in its operating model.

BEST SUBSCUSTODIAN – MIDDLE EAST

Bahrain

HSBC Bahrain grew and enhanced its securities services and custody business in 2021 despite the high market volatility amid the ongoing pandemic. It is also one of the leading advocates of digitalization and automation in the market, particularly in the custody space.

Egypt

HSBC Egypt is one of the largest subcustodians in the market with a wide spectrum of foreign and domestic clients. The Ministry of Finance engaged its expertise to simplify tax documentation and requirements.

Jordan

Standard Chartered Jordan posted a 3% increase in account opening activity by existing clients. It facilitated the implementation of key initiatives, including the use of flexible signature and delivery methods, for third parties such as local depositories and third-party subcustodians, as well as digital/scanned account opening documents for clients.

Kuwait

HSBC Kuwait has the largest market share in terms of foreign-institutional investments, posting a 27% increase in AUC in 2021 and a 400% increase in AUC since 2016. Transaction volumes grew by 53% in 2021.

Oman

HSBC Oman maintained its reputation in the market as a custodian with a significantly large local and regional team. Its overall market share grew to 85% in volume while its performance rose 12.87% in 2021.

Qatar

HSBC Qatar has been leading market innovation and development discussions with the Qatar Securities Exchange and other regulators. It has been playing a key role in the digitalization, product diversification, and sustainability agenda of the capital markets as the country works to gain developed market status.

Saudi Arabia

HSBC Saudi Arabia continues to have the largest market share in terms of foreign institutional investor assets and transaction volume. It also supports the local asset servicing market by sharing its knowledge and experience in the custody business and industry best practices.

UAE

HSBC UAE successfully implemented a hybrid working model in response to the Covid-19 emergency, operating in full capacity while exercising flexibility to make adjustments depending on the situation in a particular area. Although its AUC growth was flat, transaction volumes rose 7% in 2021.

Standard Chartered UAE posted a 20% growth in AUC and acquired 13 new mandates, surpassing its 2020 record by 30%. It launched an FX benchmarking capability, using reference rates such as B-Fix to provide better FX pricing transparency for its clients, and introduced prime and structured finance solutions across the Middle East and Africa from the Dubai International Financial Centre.

BEST SUBSCUSTODIAN – SOUTH ASIA

Bangladesh

Standard Chartered posted a 5.4% growth in AUC, 50% market share based on AUC, and 80% share of foreign trade volumes on the Dhaka Stock Exchange. It established an independent and direct connectivity channel with a large global custody client, which enables the sending of real-time settlement status messages with additional value-added trade data. In 2021 it acquired twice the number of mandates it won in the previous year.

India

HSBC posted 23% (share or growth) in foreign portfolio investment registrations in the market in 2021. It also won a mandate from an international central securities depository (ICSD) for account operator services in connection with its foray into the government securities (G-sec) market under the Reserve Bank of India’s ICSD scheme, the first and so far only mandate of its kind to be awarded in the market. It also successfully completed an inward transition of a large global custody mandate despite the challenges brought on by the pandemic.

Deutsche Bank remains one of the leading subcustodians in India despite the challenging market conditions. It displayed thought leadership, contributing to the development of the securities market framework; introduced innovative products and solutions; and displayed a high level of client-centricity.

Pakistan

Standard Chartered achieved a 9% revenue growth and retained all existing relationships during the awards period. It also acquired new key mandates from existing clients, including foreign financial institutions and large corporates.

Sri Lanka

Standard Chartered posted a 10% growth in AUC, outperforming the 4.7% rise in Sri Lanka’s benchmark. It also posted a 20% market share in terms of subcustody AUC, and captured 72% of the domestic flows and 28% of the cross-border flows in AUC. It had a 100% retention rate of existing clients despite the pandemic and country rating downgrades.

For a full list of winners, please click here and scroll down.

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