Asset servicing used to be pretty straightforward. There were the big global custodian banks that used the subcustodian to help service their clients in the domestic markets. Since the global custodians didn’t have a domestic network in the region, they used the subcustodians that had the network. The fund flow was one-way, from the developed markets to Asia.
But in recent years, two major developments have been changing this business model for custodians.
First is the rapid wealth generation in Asia, which has created a large class of Asian asset owners who are seeking to invest their assets outside of the region, to the US and European markets, as well as to the Middle East and Africa.
Second is the emergence of ESG or sustainability as an integral part of the investment process.
With regard to the first trend, the number of Asian asset owners have multiplied rapidly in recent years, particularly with the emergence of Chinese asset owners with humongous assets.
In addition, the lightning speed in the development and adoption of technology has allowed banks, both global custodians and subcustodians, to develop their own asset servicing platforms that allow them to bypass the traditional global custody-subcustody model.
The result is that it’s now a free-for-all among custodians competing for mandates from Asian asset owners with a view to using their extensive global networks to provide them with their asset servicing requirements.
This means that both global custodians and subcustodians are going after mandates from Asian as well as non-Asian (US, European) asset owners with a view to servicing their requirements not only in Asia but also internationally, or in multiple markets.
This trend has also resulted in co-partnership arrangements such as when a Chinese or Malaysian bank with an asset-owner client partners with a foreign bank (either a global custodian or a subcustodian) to service such client’s requirements in an overseas market. In the case of the Chinese banks, they are also fast-tracking the development of their overseas servicing capability. Soon this will allow them to service their client’s overseas requirements themselves without the need for a foreign partner.
For the purpose of these awards, “Asia-based clients” are asset owners whose assets are generated from Asian markets. This would include local as well as foreign insurance companies with a huge asset base in Asian markets such as Prudential, Manulife, Sunlife, etc. “International clients” are asset owners whose assets are generated outside of Asia such as US and European pension funds.
The second trend that has become evident in this year’s awards is the servicing of environmental, social and governance (ESG) reporting requirements by asset service providers. Increasing regulatory requirements for ESG and sustainability reporting have pushed asset owners and asset managers to look to their asset service providers to provide solutions that will allow them to comply with the new rules.
The huge hunger for ESG and sustainability-related data has also created opportunities for asset service providers to provide solutions that can generate data and information for their clients.
For us at The Asset, these developments have been making our evaluation of the winners for the asset servicing awards, which we now call “The Sustainable Investment Awards”, more and more challenging.
In response to this challenge, we have been tweaking our evaluation process for the awards.
In addition to looking at the business developments and competitive landscape through pitch calls and client calls, The Asset has also developed a methodology with seven indicators to evaluate the banks, looking into various aspects covering service quality, clients’ feedback through both client calls and the Asset Servicing Insights 2023, and the quality of participation during the awards process.
The best in asset servicing were honoured during an Oscar-style presentation of The Asset Triple A Sustainable Investing Awards at the Four Seasons Hotel in Hong Kong last night (June 19).
BEST IN ASSET SERVICING
Deutsche Bank is recognized as Best in Asset Servicing for its ability to maintain top-notch level of servicing despite constraints in resources, as well as its ability to win new mandates following the lost of a major global subcustody mandate in 2021. Deutsche Bank also received the highest rating in terms of client feedback during the awards period.
BEST ESG CUSTODIAN
BNP Paribas is recognized as the Best ESG custodian for having the highest level of ESG methodology, standards and level of integration.
BEST CUSTODIAN, OVERALL
HSBC wins Best Custodian, Overall. Its extensive network and market-leading position in almost all markets that it services allows it to play a key role not only in business development but also in terms pushing the industry to new levels of growth and innovation.
BEST GLOBAL CUSTODIAN, INTERNATIONAL CLIENTS
State Street wins Best Global Custodian, International Clients as it continues to support pension fund clients in their global expansion. State Street services seven of the top 10 global pension funds by providing them with leading solutions in ESG, data and analytics, private markets, as well as by offering a wide range of technology-driven scale and solutions.
BEST GLOBAL CUSTODIAN, ASIA-BASED CLIENTS
BNY Mellon wins Best Global Custodian, Asia-based Clients as it continues to focus on providing global asset servicing for Asia-based clients including insurance companies, pension funds, sovereign wealth funds, and central banks.
BEST IN COLLATERAL MANAGEMENT
BNY Mellon wins Best in Collateral Management. In 2022, BNY Mellon continued to focus on the executional excellence of their collateral management strategy, allowing it to expand its services in key markets, including China, Indonesia, Malaysia, Japan, and Australia. The bank has also broadened the universe of acceptable collateral and access to sustainable investment tools for the benefit of clients throughout Asia-Pacific.
BEST IN SECURITIES LENDING
State Street wins Best in Securities Lending as it continues to be the leading provider with one of the largest agency lending programmes in the world. Its lending network spans across 37 markets and services clients across 47 jurisdictions. It also provides the latest lending solutions, allowing its Asian clients to maximize benefits from the lending programmes.
BEST SUBCUSTODIAN, OVERALL
HSBC wins Best Subcustodian, Overall as it continues to dominate the subcustody space across all markets in Australia, North Asia, Southeast Asia, South Asia, and the Middles East.
BEST SUBCUSTODIAN, GLOBAL
Standard Chartered wins Best Subcustodian, Global as it continues to display its ability to service top global custodians in the region after winning a key global custody mandate in 2021. It also implemented data and digital solutions, expanded its product range, and strengthened its core capabilities in international custody and fund services in 2022.
BEST SUBCUSTODIAN, BROKER-DEALER
BNP Paribas wins Best Subcustodian, Broker-Dealer as it remains among the top clearers in the market. It also remains the leader in derivatives clearing as well as in cash equities custody and clearing. It also ranked the highest in third-party cash equities clearing on the Stock Exchange of Hong Kong, among other achievements in 2022.
BEST DOMESTIC CUSTODIAN, OVERALL
Standard Chartered wins Best Domestic Custodian, Overall as it won new domestic custody mandates in key markets, taking business away from competitors as well as winning new-new mandates.
BEST FUND ADMINISTRATOR, RETAIL FUNDS
HSBC wins Best Fund Administrator, Retail Funds based on its continuing market leadership in the administration and servicing of mutual funds across all key performance metrics. It remains the go-to fund administrator for fund managers who launch new funds.
BEST FUND ADMINISTRATOR, ALTERNATIVES
HSBC wins Best Fund Administrator, Alternatives as it continues to be the leading player across all major asset classes and services, demonstrating global competitiveness and scale, as well as undisputed market leadership in the region.
BEST IN CORPORATE TRUST
Citi wins Best in Corporate Trust based on its dominance of Asian debt capital market deals in 2022, top performance in the North Asia market, and phenomenal growth in loan volumes, finance volumes, as well as the value of the deals won. It also remains a highly preferred trustee, administration and agent service provider based on client feedback.
BEST DR BANK
Citi wins the Best DR Bank based on its leading market share in terms of fund raising for 2022 amid a very challenging market. Citi also led the market in terms of number of deals which accounted for the bulk of the total deals during the period.
To see the full list please go here.