GERMANY - New domestic and Europe-wide regulations for the financial sector are putting pressure on custodians operating in Germany, consultancy kommalpha has found.
In its annual survey - conducted on behalf of the Financial Times' German pension magazine dpn among custodians and custodian banks operating in Germany - kommalpha said the so-called 'Depotbankrundschreiben' by German supervisor Bafin had caused the most strain.
This circular on custodians and custodian banks has sharpened some regulations regarding reporting and verification.
Clemens Schürhoff, board member at kommalpha, said the obligation to verify legal and bespoke exposure caps for various asset classes in investment managers' portfolio, based on independent data warehousing, would lead to an increase in demand for IT solutions among custodians.
As for international regulations, Schürhoff mentioned a tightening of US tax reporting, as well as the new UCITS V framework, which will deal with the question of sub-custodian networks, which could lead to an increase in costs of investing in "exotic" countries.
In Europe, Schürhoff sees "a potential new market for custodians" if investors, under the AIFM directive, are required to find a custodian for their alternative investments.
Apart from this, the kommalpha board member pointed out that custodians are also busy trying to help their clients deal with new reporting requirements under Solvency II and Basel III.
According to data collected by kommalpha, BNY Mellon has overtaken Commerzbank for the top spot in terms of assets under custody.
BNY Mellon increased its assets under custody in Germany from €500bn to €531.7bn, while Commerzbank saw its assets under custody drop from €538bn to €440bn.
Landesbank Baden-Württemberg (LBBW) maintained third place, with assets under custody dropping slightly from €430bn to €405bn.
In total, 18 custodians and custodian banks - with €3.5trn in assets under custody and €1trn in assets held as custodian banks - took part in this year's survey.