Custodian bank

A custodian bank, or simply custodian, is a financial institution responsible for safeguarding a firm's or individual's financial assets. The role of a custodian in such a case would be the following: to hold in safekeeping assets such as equities and bonds, arrange settlement of any purchases and sales of such securities, collect information on and income from such assets (dividends in the case of equities and coupons in the case of bonds), provide information on the underlying companies and their annual general meetings, manage cash transactions, perform foreign exchange transactions where required and provide regular reporting on all their activities to their clients. Custodian banks are often referred to as global custodians if they hold assets for their clients in multiple jurisdictions around the world, using their own local branches or other local custodian banks in each market to hold accounts for their underlying clients. Assets held in such a manner are typically owned by pension funds.

Local custodian bank

In relation to American Depositary Receipts (ADRs), a local custodian bank (also known as a sub-custodian or agent bank) is a bank in a country outside the United States that holds the corresponding amount of shares of stock trading on the home stock market represented by an ADR trading in the U.S, with each multiple representing some multiple of the underlying foreign share. This multiple allows the ADRs to possess a price per share conventional for the US market (typically between $20 and $50 per share) even if the price of the foreign share is unconventional when converted to US dollars directly. This bank acts as custodian bank for the company that issues the ADRs in the U.S. stock.

Examples

The following companies offer custodian bank services:

• Bank of New York Mellon
• BNP Paribas Securities Services
• Brown Brothers Harriman & Co.
• Fifth Third Bank
• Goldman Sachs
• HSBC
• Japan Trustee Services Bank
• JPMorgan Chase
• Northern Trust
• RBC Dexia
• Union Bank of California
• Standard Bank
• State Street Bank & Trust
• Wells Fargo Bank
• Deutsche Bank
• UBS
• Credit Suisse
• HDFC Bank
• NAB

Self-directed IRA custodians

Certain financial institutions specialize in the administration and custody of self-directed retirement plan such as IRAs, Roth IRAs, SEP IRAs, Rollover IRAs and Solo(401(k)s. Such institutions provide required legal custody services for the assets associated with self-directed retirement plans and administrative services such as investment execution, recordkeeping, accounting, and IRS and client reporting.

Custodian Bank Ratings

Since 2001, Thomas Murray, a banking research company, initially in partnership with Global Custodian Magazine, began publishing global custody ratings of both Global and Local Custodian banks.

Bankers as a custodian of public money notes verification