JPMorgan to Outsource $500Bn Custody Business in Hong Kong, Taiwan

JPMorgan Chase, the world's third-largest global custodian, is set to outsource the operations of its local custody business in Hong Kong and Taiwan with Citigroup, HSBC and Standard Chartered in the race for the mandate, two sources with knowledge of the matter said.

Local custody business takes care of transactions and runs the book for clients when they access certain markets. Global custody, in contrast, manages cross-border investments with a vast network and holds relationships with clients.

JPMorgan has around $520 billion worth of client assets under custody (AUC) as a local custodian in those two Asian markets, said a third source with direct knowledge of the matter.

The bank will continue to provide global custody services in those two markets.

The bank is aiming to complete the transition in Hong Kong and Taiwan to another bank by the end of next year, the third source said.

That move would mark its exit from the local custodian business in the Asia Pacific region, said the first two sources.

JPMorgan in recent years exited lower-margin local custodian business from other markets in Asia Pacific including Australia and South Korea. Falling custodian assets had made it less lucrative, the two sources said.

The bank in 2020 ceased to offer local custody services for external clients in Australia while maintaining one of the largest global custodian operations in the market. That move left Hong Kong and Taiwan as two markets where it offered local custody services.

With $29.7 trillion worth of client custody assets around the world, JPMorgan posted a 9% year-on-year revenue increase in securities services, which includes its custody operations, in the third quarter of this year.

(Source: Reuters)