Caisse des Depots et Consignations (CDC) has announced that it aims to become a leading European player in the custody and safekeeping business. CDC is already the largest French custodian, with over 2.8 trillion assets held in custody.
European Monetary Union will trigger a true revolution in asset allocation strategies for institutional clients," says CDC. Assets held in custody at CDC are 90% French with just 10% in foreign assets, but this allocation is expected to shift over time to 30% French, 60% European and 10% outside Europe, the institution says.
"When currency risk is eliminated, interest rate markets will converge while equity market diversification will intensify," it says. This is why CDC says it will become a Europe-wide custodian, to stay in line with changing behaviour of fund managers.
It needs to be physically present in at least the major euro-zone countries and is now on the lookout for partners. It already has a German subsidiary and says an operational partnership with an entity in Luxembourg will soon lead to a local presence there. It hopes to open a Dutch operation by the end of the year, with offices in Italy and Spain following later.
CDC certainly does not have a network across Europe on the scale of Paribas or Société Générale. But its leading position in France as custodian should lure foreign clients, it says. "We have a rating and this remains understandable everywhere, not just in France," says Emeric Laforet, who is responsible for the development of CDC's custody department.
A successful euro-custodian does need to establish a physical presence in different European countries, he says. This is particularly vital for the equities side of the business. Projects to coordinate clearing of fixed-interest products within Europe are under way, but few projects are seen on this level for equities. "To be efficient in securities clearing, you have to be as close as possible to the national market," Laforet says. CDC also aims to use the MDCC strategy."