Germany’s largest bank – the 125 year old Deutsche Bank in Frankfurt – has announced that it is aiming, this year and for the following two years, to double its custody business.
Throwing down the gauntlet to US banks, Deutsche is making it clear that its ambition is to be among the top three in cross-border trades worldwide after Chase and Citibank and ahead of the Bank of New York.
Deutsche’s volume of custody business has risen fourfold in the last five years and it reckons that most custodian banks in mainland Europe will not be able to meet the challenge of having a base in all the major European financial centres in order to serve as a sole point of contact for Euro transactions.
But Deutsche has made a New Year resolution to accelerate its efforts and meet that challenge – with Japanese and US investors in mind – and the bank’s global head of securities and custody services, Peter Grafunder, says that the other banks with operating custody units in EU member countries will probably include “Citibank, Banque Paribac and possibly ABN AMRO.”
Deutsche invests some DM40m ($24.6m) annually and has $457bn under custody for 2,600 institutional investors. The bank has not previously re-vealed details of its custody business.
Clearly, it is the market leader in Germany, ahead of its nearest rival, Dresdner, and Deutsche reckons that the European and global market will grow while the number of those competing for it will shrink in the years ahead. Grafunder takes the view that the reason why foreign competitors – most recently Barclays – have pulled out of custody in Germany is “lack of local expertise”.
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