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(June-2002) Big fish in a little pond
The Australian custody industry has been through much consolidation over the past few years. Super Review asked the main players how many master custody providers they believe the Australian marketplace can support over the long-term.
ANZ Banking Group: Two to three to service larger scale clients (mainly targeting fund managers). We also envisage the emergence of some niche players to service small to medium scale clients.
Commonwealth Custodial Services: Three.
Cogent Investment Operations: We believe that there are five serious players in the Australian custody market including ourselves. We can’t see rationalisation changing the market in the foreseeable future.
HSBC Bank Australia: Only the top few will be able to offer the service demanded.
JPMorgan Chase Bank: The Australian master custody market is likely to end up being supported by two global players (such as JPMorgan) and two local indigenous banks.
National Custodian Services: Three.
Permanent: Master Custody is a commoditised business. However, market share does exist for niche players who can deliver quality service to the market at a competitive price. Due to domestic tax legislation, the domestic market is not very attractive to global players. Ultimately the master custody environment will rationalise to five or six players.
RBC Global Services: Three to four major master custody providers will provide sufficient depth and client choice to the Australian super market while maintaining the required economies of scale.
State Street Australia: The continued introduction of increasingly sophisticated investment structures, coupled with the industry move towards T+1 trade settlement, indicates that further rationalisation among service providers may take place due to the ongoing investment and infrastructure required to fully support client needs.
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