BNP Paribas Securities Services’ local custody and settlement services has added its third client since its launch in May, winning the business of EFG Bank, a Zurich-headquartered global private bank.
EFG Bank has appointed BNP Paribas as both its global and local custodian in four markets covered by the group’s 23 branches around the world.
“EFG was our first external client in Australia. Given we only launched a couple of months ago, it was quite significant to bring an external client onto our custody platforms that quickly,” Ken Shaw, BNP Paribas’ head of sales and relationship management says.
The mandate represents $3 billion globally that the custodian will manage on behalf of EFG Bank.
BNP Paribas’ head of client segment for banks and broker-dealers, Andreas Scharbach, says that private banking clients necessitate a strong focus on the custody component.
“You have to be really hands on for corporate action events because they [private banks] normally have underlying clients who are generally high-wealth individuals,” he says.
“So, there is big focus on custody events predominantly and this distinguished it from a regular broker in the market, for example, which would be more focused on settlement, and here it is more on the servicing of the assets.”
Counterparty risk averse
Shaw says that clients are increasingly concerned about counterparty risk and are looking for custodians with a proprietary network capability that can mitigate this risk.
“Globalisation, counterparty risk and that continual investment in technology overall becomes quite important,” Shaw says.
Scharbach says that BNP Paribas is looking to attract potential Australian clients to use its existing platform but must first overcome regulatory hurdles for clearing.
The Australian Stock Exchange currently does not allow banks to become third-party clearing providers.
“We are in discussions with the ASX and they, basically, have it on their agenda to change this,” he says.
“As soon as the ASX changes it, we will be looking to do third-party clearing in the market as we already do in Europe and also in various other Asian locations. Then we are definitely going to target Australian names.”
Scharbach says they are hopeful that the necessary regulatory changes will be in place by 2013.
