JPMorgan Chase to Outsource Local Custody Business in Hong Kong and Taiwan
Citigroup, HSBC, and Standard Chartered in the Running for the Mandate
JPMorgan Chase, the world’s third-largest global custodian, is reportedly planning to outsource its local custody operations in Hong Kong and Taiwan. The bank is currently in the process of selecting another financial institution to take over these operations, with Citigroup, HSBC, and Standard Chartered among the contenders for the mandate. This move comes as JPMorgan aims to focus on its global custody services and exit the local custodian business in the Asia Pacific region.
The Importance of Local Custody Business
Local custody business plays a crucial role in managing transactions and running the book for clients accessing specific markets. It involves handling client assets under custody (AUC) and ensuring smooth operations within the local market. In contrast, global custody focuses on cross-border investments and maintaining client relationships.
JPMorgan’s Assets Under Custody in Hong Kong and Taiwan
JPMorgan currently has approximately $520 billion worth of client assets under custody (AUC) as a local custodian in Hong Kong and Taiwan. This significant amount underscores the bank’s prominent presence in the region and highlights the importance of selecting the right institution to take over these operations.
The Selection Process
According to sources familiar with the matter, JPMorgan is actively evaluating potential candidates to take over its local custody operations in Hong Kong and Taiwan. Citigroup, HSBC, and Standard Chartered are reportedly among the top contenders for the mandate. The bank aims to complete the transition to another financial institution by the end of next year.
Exiting the Local Custodian Business in the Asia Pacific Region
If JPMorgan successfully outsources its local custody operations in Hong Kong and Taiwan, it would mark the bank’s exit from the local custodian business in the Asia Pacific region. In recent years, JPMorgan has already withdrawn from lower-margin local custodian businesses in other Asian markets, including Australia and South Korea. The declining custodian assets in these markets have made it less lucrative for the bank to continue its operations.
Conclusion:
JPMorgan Chase’s decision to outsource its local custody operations in Hong Kong and Taiwan reflects its strategic focus on global custody services. By partnering with Citigroup, HSBC, or Standard Chartered, the bank aims to ensure a seamless transition for its clients while maintaining its strong presence in these markets. As JPMorgan continues to streamline its operations and adapt to changing market dynamics, this move underscores the evolving landscape of the financial industry in the Asia Pacific region.