What is the true role and value of custody within correspondent banking?

Richard Fodder, Senior Vice President, Brown Brothers Harriman Investor Services

Abstract
Providing custody for the assets of global investors has become an increasingly specialised business from which many banks have withdrawn. Even among those banks that choose to specialise, the costs of remaining competitive have resulted in mergers and acquisitions, with the result that few banks are now regarded as global custodians. Banks outside this group are faced with the challenge of providing their globally-invested clients with a comprehensive offering or risking losing the broader relationship. This article seeks to draw a distinction between the process of manufacturing a global custody product and the opportunities and challenges of distribution. It considers the approaches and decisions made in the past and considers some alternative strategies in the light of market developments and the economies of scale. By drawing a parallel with the tradition of correspondent banking, it suggests how banks can work with complementary partners to meet their clients’ requirements.

Keywords
custody, settlement, distribution, consolidation, banking, custodian, correspondent banking

Richard Fodder is Senior Vice President, Brown Brothers Harriman Investor Services. After reading Mechanical Engineering at Nottingham University, Richard joined Barings in 1982 and performed a number of roles culminating in Head of Global Custody in London prior to the withdrawal of that service in 1996. Appointed as Head of Relationship Management in EMEA for Bankers Trust Global Investor Services in October 1996, he oversaw the integration of that business, firstly with that of Deutsche Bank in 1999 and then into State Street in 2003. In 2004, Richard joined JPMorgan Worldwide Securities Services as Head of Client Management and Sales for UK Asset Managers and South Africa. He was appointed Head of Investor Services, London at Brown Brothers Harriman in May 2007.

If you wish to read the full text of the article you will need to subscribe.