World’s Best Sub-Custodian Banks 2023

For financial institutions seeking to expand globally, sub-custodians serve as the investment gateway to their respective jurisdictions, being a critical component of the capital markets infrastructure. Partnering with the right sub-custodian is essential to mitigate inherent risks through timely and accurate trade execution and settlement and the safekeeping of client assets, particularly during market volatility and geopolitical unrest.

This is the 21^st year Global Finance has recognized the World’s Best Sub-custodian Banks, now covering seven regions and 83 countries, territories and districts, for their commitment in managing the increased diversity and complexity of financial instruments to provide world-class custody services. With comprehensive servicing platforms supported by extensive IT systems, these banks continue to invest in their infrastructure, improving process automation and operational efficiencies to attract and retain clients with customizable sub-custody solutions. This is particularly evident in the evolution of new investment vehicles, investment structures and digital asset classes. Platform refinements are also a response to evolving regulatory requirements, and sub-custodians are an invaluable resource in providing market guidance to existing clients and new institutional investors in the territory.

In selecting the institutions that reliably provide the best services in 83 countries and seven geographic regions, Global Finance editorial board considered market research, input from expert sources and entry information from the banks themselves. The criteria included customer relations, quality of service, competitive pricing, smooth handling of exception items, technology platforms, post-settlement operations, business continuity plans and knowledge of local markets, regulations and practices.

Standard Bank retains its position as the Best Sub-custodian in Africa, with the most comprehensive range of sub-custodian services through a network that spans 16 countries. The bank’s flexible operating model is a differentiator among its competitors, delivering high levels of service and relying on a robust technology infrastructure for efficient and effective custody services. The bank continues to refine its service capabilities to build on its powerful franchise that has captured strong market share across its footprint and success with customer mandates, serving eight of the top 10 global custodians and over 40% of the leading broker-dealers and pension funds in sub-Saharan Africa. Ongoing investment in its technology infrastructure is critical for growth. Standard Bank made a significant investment of about $650 million in 2022 on top of $600 million in 2021 for platform upgrades to improve operating efficiency and client interactions.

Utilizing the TCS BaNCS global custody and securities lending platform, which is used in conjunction with the bank’s proprietary Investor Services Online banking platform, clients benefit from real-time settlement, reporting and customizable features. A flexible structure, with an operating relationship either directly in-country or centralized from South Africa, includes dedicated market specialists in each country and provides operational synergies for clients in multiple countries. This provides the convenience of a single legal agreement and client contact across markets, with local service and account management. The bank emphasizes strong client service that provides market insights delivered through a central information management team for periodic news flashes and quarterly updates on regulatory developments. Service is enhanced by local teams in each country that assist with due diligence and other regulatory and risk mitigation requirements.

Standard Bank is leading the evolution in custody across Africa by working with industry and regulatory participants to represent client interests and shape the sector with new process improvements. A new messaging protocol to be implemented in keeping with the ISO 20022 data interchange standards is being rolled out in 2023-2025, and the development of data solutions for real-time access to transactions and reporting is part of a pilot program for pension fund clients. The bank is also involved in discussions around digital asset custody in the region, as reflected in Botswana’s Virtual Assets Act of 2022 and the rules on the issuance and custody of digital assets issued in May 2022 by Nigeria’s Securities and Exchange Commission.

The bank, under its Stanbic brand, is also our winner in Botswana, Kenya, Mozambique, and Nigeria, four African countries where it is making advancements through various initiatives. In Botswana, the bank played a crucial role in implementing the new Central Securities Depository system in 2022 by advocating for best practices, participating in all related market forums, and testing in connection with the launch. In Kenya, the bank was instrumental in the development of derivatives clearing. At the same time, in Nigeria, there is the ongoing development of securities lending, a transition to settlement one trading day after the trade date (T+1), and improvement of efficiencies such as straight-through processing rates for trade settlement. The bank is also working toward derivatives clearing in this market following the country’s two central counterparties’ launch of exchange-traded products clearing capabilities.

DBS wins this year’s award in the Asia-Pacific region as it continues to lead the industry by expanding its comprehensive custody services into new asset classes and by ongoing automation of the post-trade settlement process to improve operational efficiency and convenience. Custody offerings are delivered through the bank’s IDEAL system. This unified platform combines standard and digital custody capabilities to provide clients with instant access to their securities information, with dynamic reporting capabilities; and it includes new features for derivatives. This platform is augmented by an effective servicing team with strong market knowledge, to provide a robust client experience. It has execution-to-custody capabilities that leverage the interconnectivity between brokers and DBS to streamline client trade confirmations and settlements.

By effectively navigating market developments, DBS is also recognized as the winner in three regional countries for demonstrating its innovation with market leadership and new investment structures. In Singapore, DBS is expanding its service for Variable Capital Company (VCC) investment structures. It assisted a large asset manager in launching its first VCC exchange-traded fund (ETF) and is the first custodian to offer a VCC ETF listed on the Singapore exchange for investment in Chinese companies. The bank also introduced improved automation for transaction reconciliation with Singapore’s Central Depository. In Indonesia, the bank guided a large insurance client in regulatory compliance on new investment structures and is also one of the few Shariah-compliant custodians in the market. As India moved its settlement protocol from T+2 to T+1, the bank maintained consistent operational execution during the transition to ensure settlement efficiency. It was the first derivatives clearing member to offer a margin calculator to enhance liquidity. DBS is facilitating investments in the country through India’s Gujarat International Fin-Tec City / International Financial Services Centre, which connects India to global markets.

Continually at the evolutionary forefront of the industry, DBS is actively involved in decentralized-finance initiatives, such as helping to advance the servicing of digital assets through its participation in Project Guardian. This is an industry collaboration to explore the feasibility of asset tokenization, in which tokens representing cash or securities are held in digital asset wallets on a public blockchain. For global clients subject to the EU’s new unified settlement requirements under the third phase of the EU’s Central Securities Depositories Regulation, known as the Settlement Discipline Regime (SDR), the bank is automating the reconciliation and notification process for greater visibility and better management regarding the penalties imposed for late matching and settlement fails for trades involving a European central securities depository. In derivatives, DBS introduced real-time trade settlement, margin calculation and position monitoring for investment efficiency and risk management.

UniCredit retains its top position as the best sub-custodian in Central and Eastern Europe (CEE) by continuing to refine its business model through technology upgrades, focusing on providing exceptional services and shaping the sector’s evolution in this region. Through this level of commitment and service execution, UniCredit has become deeply embedded in the sector, holding significant market share in each of the 11 markets in its franchise. We have recognized it as the top option for global custodians and international broker-dealers seeking to operate in the CEE region.

To access an extensive range of services, clients can utilize a direct asset servicing model in each of the 11 CEE countries served or through the bank’s Austrian hub. This hub is a core service that offers many benefits to global clients operating in multiple jurisdictions, including centralized cash services and funding, the guidance of a single relationship manager, standardized reporting across all markets, uniform distribution of market insights, and administrative efficiencies with documentation and due diligence requirements for a single counterparty in Austria.

UniCredit’s operating model leverages a newly implemented BaNCS global custody platform now operational in seven markets, with its most recent rollout in Hungary. It delivers to clients the latest technology for operational efficiency with the settlement process, including enhanced messaging and customized reporting. Of the markets served in the CEE region, UniCredit is also the country winner in five of them for building on a long-standing commitment to each jurisdiction to shape and improve the market infrastructure and continuing to provide industry-leading services.

In Bosnia and Herzegovina, the bank is a top-three custodian and led the shift from T+3 to T+2 settlement and a true delivery-versus-payment (DvP) settlement cycle. It is the dominant player in Bulgaria, with a commanding market share as the top custodian and a strong record of originating new mandates. It is active with regulators regarding implementation of the euro in Bulgaria and adopting the Target2 Securities initiative toward centralized settlement for euro-denominated securities. UniCredit is the top service provider in Hungary, with the largest share of assets under custody, and has established a long-standing client base with its 25-year tenure in the country. Ongoing market advocacy aims to move the Hungarian market toward international standards, such as aligning proxy voting with standards set by the EU’s Shareholder Rights Directive II. The bank’s Serbian market is involved in initiatives related to tax procedures, more-efficient proxy voting, and infrastructure issues surrounding improvement of straight-through processing rates and enhancement of the local central securities depository system. As the largest player in Slovenia, UniCredit’s clients benefit from the new BaNCS system, implemented in 2022, with improved service offerings, operational risk management and compatibility with ISO 20022 standards for messaging transaction instructions.

As a pioneer in the Latin American market, Citi has built the leading securities services franchise and is recognized here as the best sub-custodian in the region. The bank’s operational scale differentiates its ability to provide the most comprehensive custody services for all post-trade requirements, with the industry’s largest proprietary network. A robust custody system backs the platform to ensure service efficiency and consistency by allowing customization of the transaction life cycle according to specific market requirements.

Of the seven Latin American markets served by the bank, we have recognized Citi as the country winner in five, acknowledging the bank’s impressive service capabilities and importance in advancing the market in pursuit of evolving client requirements in these jurisdictions. Across the region, Citi implemented the development of ISO 20022 standards for cash-related messages, and specific country initiatives involve ongoing refinement of IT platforms and product enhancements to improve service efficiency.

In Argentina, Citi promoted the use of proxy electronic voting and migrated its core banking application to a new version of the Flexcube platform in 2022, enhancing the scalability of the business. The bank lobbied the Colombian market to adopt a streamlined process for the registry of foreign clients to create a standardized environment for tax withholding and reporting. Citi is also augmenting its systems in anticipation of the early 2024 launch of an enhanced system for government bonds at the central securities depository. The bank has been actively involved with regulators on tax reform and also on the merger of stock exchanges in Peru, Chile and Colombia to create a single settlement platform across those three markets. Citi was the first to provide custody to foreign investors in Panama, beginning in 2011, and is engaged with market authorities on regional infrastructure expansion for the execution of cross-border securities transactions. In Peru, there is progress in adopting DvP payment protocols, automation of interbank cash transfers, and service enhancements with fixed-income trades. Citi is working to improve the settlement process with the country’s central clearer, Cavali, for greater efficiency. With more than a 20-year tenure in Mexico, with its acquisition of the Banamex Financial Group, advocacy efforts are focused on tax reform, cybersecurity, e-issuance of securities issuance, remote proxy voting, and alignment with global standards for the SDR. With more than a century of doing business in Brazil, Citi helps clients navigate the complexity of the market through service updates on regulatory and market developments and has streamlined the registration process for nonresident investors by ongoing refinement of the Smart Portfolio Application Form. Additional 2022 enhancements in Brazil include expanded foreign exchange capabilities, with new currencies including the Singapore dollar; and the introduction of trade-matching capabilities through the Citi Velocity digital platform, for improved straight-through processing rates between counterparties and central depositories.

First Abu Dhabi Bank (FAB) significantly expanded its business model to become a formidable player in the Middle East and is our winner for best sub-custodian in the region. With the broadest range of custody services, FAB’s flexible service model focuses on global custodians and international broker-dealers, with a regional direct custody model; and on institutional investors based in the Middle East and North Africa, with global custody services. In an industry where the scale of operations is critical, FAB took a big step in 2022 by onboarding State Street Bank’s sub-custody business in Kuwait, Bahrain, Oman, Saudi Arabia, and the United Arab Emirates (UAE)—representing the largest sub-custody transfer in the history of the Middle East. This alliance represents an enormous opportunity for FAB to accelerate its franchise significantly across its seven-country regional footprint by integrating its client-facing platform with State Street’s robust back-office systems covering trade-order management systems and data-management, performance, and risk solutions. Operational synergies link systems at both institutions for better automation, operational workflow, and risk control through digital alerts, with an interactive dashboard and data customization to increase operational efficiency.

FAB’s substantial expansion is also attributable to its highly skilled team, representing one of the largest in the region, with a Securities Services team of over 100 operating in six countries. The bank’s fast-growing franchise has attracted top talent from peers; and its team has an average of 18 years in the industry, with a blend of international and regional custody experience. Notably, the bank is well-connected and influential regarding market evolution. FAB participates in initiatives related to regulatory reform and market efficiency by lobbying on various industry topics, including Swift connectivity, capital requirements, the introduction of omnibus account structure, e-voting, and extended margin and financing requirements. Across its footprint, this includes standardization of ISO 20022 protocols in Saudi Arabia and shaping a new DvP model in Oman and Bahrain. At the same time, in the UAE, the bank introduced an e-channel for initial public offerings to facilitate investment in new equity issues. This progress is outlined in the bank’s Advocacy Roadmap with specific market challenges identified by the custody team and its clients. Challenges are addressed locally and across all markets to achieve consistency in operational protocols and best practices.

CIBC Mellon, the winner in North America and Canada, operates an exceptional franchise that encompasses all elements of the post-trade process and is built on engaging and responsive client service, scalable IT infrastructure, and market leadership. These factors have contributed to this 50/50 joint venture with CIBC and BNY Mellon having amassed more than $1.8 trillion in assets under administration as of year-end 2022, a strong track record of generating new mandates, and a near 100% client retention rate. Maintaining consistently high service levels depends on attracting and retaining a well-trained workforce, and CIBC Mellon’s dedicated team of 1,800 holds long tenures in the sub-custody business. The bank is committed to its professional development through resources promoting continuous learning, including a library of e-learning courses, internal classroom training, mandatory online training on industry best practices, and annual tuition grants.

In 2022, CIBC received the Canadian HR award for Best Remote Work Strategy, reflecting the bank’s ability to adapt to flexible and efficient work arrangements. Cutting-edge systems and technology are the backbone of securities services, and ongoing technology initiatives are focused on continued process automation with updated Swift messaging standards to provide seamless and secure data transmission and high straight-through processing rates. Additionally, CIBC will continue migrating clients from its legacy platform to BNY Mellon’s GSP custody platform through 2023 to ensure service continuity.

Recognizing the importance of customer alignment in a technology-driven business, CIBC continues to engage with its clients in a deep-dive data-assessment initiative. This includes identifying each client’s technology objectives to improve service quality and contribute to CIBC’s technology innovation strategy. One area is in digital assets, where CIBC is collaborating with stakeholders to support digital asset offerings. The bank is a leader in the sector, serving as fund administrator for the world’s first retail bitcoin and ether ETFs, in addition to servicing 21 of the 42 retail cryptocurrency offerings available in Canada. Strong market leadership includes ongoing advocacy and service as a resource for the sector. CIBC annually produces its Canada Market Profile, a publication for global financial institutions active in Canada, containing new information on market regulations and issues such as clearing and settlement rules, corporate actions, and tax developments.

With a world-class securities-servicing model, BNP Paribas is our winner for best sub-custodian in Western Europe and is also recognized as the country winner in Belgium, Ireland, Italy, Luxembourg, and the Netherlands. Its extensive franchise covers 12 countries in the region as part of its global network, which encompasses 35 countries across five continents, offering institutional clients access to more than 90 markets. BNP’s continual refinement of its platform with further automation results in more-efficient trade workflows for enhanced straight-through processing rates. It positions the bank to expand its dominant market share in many jurisdictions, with new client mandates.

The bank expanded its Execution-to-Custody model across Europe, combining its Global Markets execution capabilities and Securities Services custody and settlement offerings. This integration simplifies the client’s post-trade processing settlement process across different markets in a single transaction. On a larger scale, to enhance the customer experience, the bank completed the intragroup merger of BNP Securities Services with parent BNP Paribas in October 2022. The merger emphasizes the strategic importance of securities services for BNP Paribas as a critical component of its integrated banking model. It will provide clients with more-flexible product offerings through simplified documentation and a complementary range of products.

BNP’s success as a long-term partnership with its clients relies on an agile service model enhanced through the bank’s Uplifting Service program, a dedicated internal initiative to promote a sustainable, efficient and effective service culture throughout the custody operations. A critical element involves navigating the ever-changing regulatory landscape in Europe, and the bank demonstrates this high level of client service. With the Central Securities Depositories Regulation settlement requirements for central securities depositories operating in the EU, BNP collaborated with clients and implemented changes to systems and protocols to support them in adopting this directive before the 2022 deadline.