Custody sector increases by 4.9 per cent

NAB Asset Servicing has kept the top spot of holding the most assets under custody (AUC) despite a decrease of 16.8 per cent, according to the Australian Custodial Services Association (ACSA).

ACSA found in the second half of 2015 NAB held $584 billion in AUC, followed by JP Morgan at $573.19 billion, and BNP Paribas at $429.8 billion.

The largest increase in AUC was Northern Trust at with a 28 per cent jump to $306 billion.

While the Australian custodial and administration sector grew by 4.9 per cent to $2.9 trillion, custody of offshore assets outpaced the local market, accounting for one-third of total assets under custody.

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ACSA found Australian assets accounted for $1.99 trillion, with $926 billion in foreign assets — representing an increase of 8.6 per cent.

The level of Australian assets under custody for foreign clients (sub-custody) grew by 3.3 per cent to $1.2 trillion, ACSA said.

ACSA chair, David Knights, said as the Australian superannuation sector grows and markets need to absorb more capital, fund trustees are looking beyond Australian shores to remain well-diversified.

"While local investors are growing offshore allocations, it runs both ways, with foreign investors looking to Australia for its unique investment profile," Knights said.

"The result is that custodians are working in an increasingly globalised sector and need a broad set of skills and knowledge to do so successfully."