Citi has acquired the custody business of RBC Investor and Treasury Services (RBC I&TS) in Australia after completing the transfer of all of its local clients, making it the second largest custodian in the country.

The deal was completed four months after the two banks signed a memorandum of understanding in November, with the intent to facilitate an orderly transfer of the RBC client base to Citi over a 12-24 month period.

As of the end of last year, Citi held $575.4 billion in domestic assets under custody in Australia, while RBC held $129.3 billion, according to the Australian Custodial Services Association (ACSA).

By taking over RBC’s Australian client-base, Citi will become the second largest custodian in the country, behind JP Morgan.

“Citi provides clients with in-depth local market expertise, advanced processing technologies and value-added services, like data management, in-house unit registry and ETF servicing,” said Martin Carpenter, Citi’s Australia head of securities services.

“In addition to working with new clients, we look forward to welcoming a large number of new employees to Citi, and the added operational scale will be of great benefit to our new and existing clients.”

The transaction will also enable Citi’s securities services business to build out its Sydney footprint, in addition to bolstering its Kuala Lumpur regional operations site by taking on its locally-based employees.

“This transaction reflects Citi’s ongoing investment and commitment to the Securities Services business both globally and locally. Australia is a targeted growth markets for Citi’s custody and fund services business,” added Julie Kerr, regional head of custody and fund services, Asia-Pacific, Citi.

In 2018, RBC I&TS set out a digital transformation programme for its Australian custody business, which included system enhancement and digital solutions to win new clients.

However over the course of last year, RBC significantly scaled back its Australian custody business. In May, it announced a realignment of the business following the departure of David Travers, the CEO of the RBC Investor and Treasury Services (RBC I&TS) business in Australia for five years.

“We are proud of the business we have established in Australia, however, after careful consideration, we have concluded that the complex and dynamic nature of the market in Australia meant it was difficult for us to grow the business to the size and scale required to deliver meaningful value for our shareholders and clients,” said Andrew Allen, general manager, Australia, RBC I&TS.

“We consider that it is in the long term interest of our clients and employees to seek a transfer of our business to an organisation with a client focus and strong offering in the market.”

Australia has become a key focus of growth for Citi over recent years. In 2017, NAB Asset officially ended a 20-year global custody relationship with BNY Mellon by transferring $50 billion of assets to Citi. Citi’s AUC in Australia had also grew over 13% over 2019.