A consolidation among the providers of sub-custody services has long been anticipated but has never quite materialized. In fact, in some cases, just the opposite has happened such as J.P. Morgans announcement at Sibos two years ago that it would launch a direct custody and clearing business in 20 or so markets.
With custodians facing regulatory pressures, slimmer margins and increasing competition, that long-awaited consolidation is on the industrys doorstep, says Lee Waite, global head of Direct Custody & Clearing at Citi. The firm has the largest sub-custody network of any provider, present in 61 markets.
Weve talked a long time, as you well know, about potential consolidation in the marketplace, Waite says. So I think were now at that point where people are having to consider whats core to their business model and where they want to continue to invest and where they want to disinvest.
If I were a betting person, he continues, I would say over the next 12-24 months well see people consider getting out of the space because of the difficulties in the environment, because of how they view prospects going forward.
That said, Citi is here to stay in the sub-custody space, Waite says.
To view the video with Waite at Sibos in Osaka, click here.
(CG)