Offshore custody growing

29 March 2016

Custody of offshore assets outpaced the local market in the second half of 2015, accounting for one-third of total assets under custody, according to Australian Custodial Services Association (ACSA) data.

The Australian custodial and administration sector grew by 4.9 per cent during the same period to $2.9 trillion.

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

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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."

ACSA found NAB Asset Servicing held the most assets under custody of $584 billion at 31 December 2015 despite a decrease of 16.8 per cent from June.

JP Morgan followed at $573.19 billion, and BNP Paribas at $429.8 billion.

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