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Global custodians are likely to be asked to shoulder more of the potential liabilities from transaction services on behalf pension funds, rather than their smaller sub-custodians, because of the “new world order” for institutional banking. And this will be advantageous for those custodians which do provide both global and sub-custody under the one roof, according to Jacques-Philippe Marson, global chief executive of BNP Paribas Securities Services. Marson, a frequent visitor to Australia due to the custodian’s Asian expansion aspirations, says that in the new world order many financial institutions will be substantially owned by governments and this may impact on their reinvestment programs.
“At BNP Paribas SS, we have not cut one cent from our investment program,” he said. “We’re managing costs as we always have, but we’re not laying off as many people as some competitors. As conditions tightened, we enjoyed a flight to quality and a flight to safety, especially in Europe.” The firm has also enjoyed its decision several years ago not to provide asset management-like services to its custody clients, such as active cash management and currency hedging. “We made a conscious decision to not actively manage cash and were seen by the market as not being very aggressive.
