TM
2014 Survey
Agent Banks in
Major Markets
GLOBAL CUSTODIAN
AGENT BANKS IN MAJOR MARKETS SURVEY 2014
BNP PARIBAS
Methodology
Participants and providers will have already noticed many changes to the Agent Bank Survey process in 2014 compared with
recent years. First, and most important, we reduced the number
of questions asked in the survey by 50% and eliminated some
sections in their entirety. As a result there were 10 categories of
service and less than 50 scored questions in each response. This
process will continue in the Emerging Markets Survey, where
there will be only 24 scored questions for each response and only
22 countries covered. We also took the opportunity to eliminate
any domestic responses from the survey, along with affiliated
entries. The Survey has been returned to its original intention of
looking at the views and perceptions of cross-border investors
in different countries.
We retained the seven-point scoring scale (7.0 being Excellent
and 1.0 being Unacceptable). Responses were weighted, as were
questions, in ways consistent with previous years. We also used
the weighting system to deal with anomalous responses, rather
than simply excluding so called outliers. Finally, we abolished the
policy of substituting historic average scores in situations where
no score was provided. The previous approach had no statistical
validity and sometimes produced inappropriate outcomes. Secondly, we cut the provider questionnaire from 100 questions to
12, seeking to bring focus to market and provider changes that
might actually affect results. This was also intended to reduce
the burden on providers, who had previously been submitting
much information that wasn’t always useful and little of which
was actually used. Readers will also note changes in presentation.
Gone are the extensive tables of Cross-Border/Non-Affiliated
(CB/NA), Leading Client and Domestic Client scores across 12
categories. In order to create a solid statistical sample, the definition of Leading Clients had been pushed beyond any reasonable
definition of ‘leading’, hence our determination to no longer represent this as a separate group. Domestic responses were variable
as to the quality of content and numbers in different countries
and many questions were not relevant in all or even a majority
of markets, making the awards at best anomalous and at worst
misleading to readers.
Also gone are the various cups, stars and medals. The result
is a less colorful but what we consider more useful presentation.
For each country, we have added a Market Review section. This
is designed to explain any market-wide issues that may have had
an impact on scores for all providers. It also seeks to explain the
scores in those countries relative to prior years and other markets.
We have interviewed market participants to further inform the views
expressed in these pieces.
Extracted from Global Custodian research data
We have retained the write-ups of providers in each market
for those who, based on market share as represented by weight
of responses received, merit inclusion. Where relevant we have
sought to incorporate client comments into the write-ups. This
is intended to provide illustrations of changes in perception as
reflected by scores. In all cases comments are taken directly
from the questionnaires submitted by clients. Finally, we have
presented simply the CB/NA scores for each provider in each of
six categories (Settlement, Asset Servicing, Relationship Management & Client Service, Ancillary Services, Technology and
Value Delivered). These six categories in some cases reflect a
single category in the questionnaire. In other cases they are a
combination of categories. While this makes the presentation
less granular it does allow focus on core areas of custody service
provision in terms of assessment of perception. This is relevant
for both providers and users of the Survey results. Providers
operating in different markets face similar but unique challenges and opportunities. Providers in the same market may have
client lists dominated by different types and sizes of clients. We
therefore consider that it would be misleading to present a total score for each provider as this would attract natural, but
misguided, attention and focus. Also, though we understand
the marketing and commercial logic behind grouping different
markets together, whether by geographic proximity or common
exchange ownership and infrastructure, we have retained the historic approach of presenting the survey information and scores
based on individual countries.
We have taken the opportunity to create a new “Hallmark of
Excellence” by way of digital accreditation of outperformance,
whether based on global scores, individual market scores or scores
achieved in the six categories. Agent banks have been made aware
of their eligibility for these awards. We hope that all agent banks
are sufficiently committed to the business to promote their successes
through this new mechanism—for their own benefit but also for
the benefit of their clients.
We fully expect changes to attract attention and comment.
We do not expect everyone to be happy with the outcome. We
understand that providers and users of the survey will need time
to adjust to the new approach. However, it is important to note
that the primary motivation for all the changes has been to make
the process easier and more useful to all those individuals who go
through the time and trouble to complete the survey. As always, we
want to express our gratitude, both on our own behalf and that
of the agent banks themselves, to all those individuals around the
world for the efforts they have made.
2
GLOBAL CUSTODIAN
AGENT BANKS IN MAJOR MARKETS SURVEY 2014
BNP PARIBAS
Australia
AUSTRALIA
SETTLEMENT
ASSET
SERVICING
RELATIONSHIP &
CLIENT SERVICE
TECHNOLOGY
ANCILLARY
SERVICES
VALUE
DELIVERED
BNP Paribas Securities Services
6.43
6.05
6.17
6.21
6.15
5.87
Citi
5.63
5.51
5.57
5.39
5.48
5.48
HSBC
5.66
5.64
5.59
5.65
5.53
5.49
J.P. Morgan
5.33
5.31
5.28
5.52
5.28
5.26
National Australia Bank
5.43
5.29
4.94
5.61
5.32
5.15
Market Review
BNP Paribas Securities Services
Market dominance clearly does not equate to client satisfaction Down
Under, with the region’s strongest performer by some way—for the
purposes of this survey—possessing, by its own estimates, a mere 5%
of the total market share.
Generally, the Australian market is rated in line with the survey
average by clients, with an average score a statistically insignificant
0.02 points below the global average and up by 0.13 points on 2013.
Corporate Actions stands out as a strongly performing service area for
Australian agent banks, a factor that reflects the recent pursuit of corporate actions messaging enhancements by certain participants.
While the CSD Austraclear’s introduction of an increased fee this
year appears to have been successfully absorbed by market participants,
its combination with new cash equity margin payments and an increase
in the rate of tax on non-resident fund payments has clearly made an
impact. The evident decline in cross-border customer satisfaction regarding fee competitiveness in 2014 comes as no surprise.
Commenting that they have “experienced a significant growth in 2013
in onboarding international business,” BNP Paribas’ own market share
estimate is still only 5%. However, it received 15% of the responses for
the market. The results of this increase are positive, as it has received
feedback that ranks it well above the Australian average in every category.
Relatively, its strongest result was in Tax Reclaims, for which it ranks
0.87 points above the market average. Despite an extension of BNP Paribas’ multi-direct network access to Australia, the bank was unable to
maintain the high scores seen in Technology and Connectivity in 2013.
Strong improvements in scores awarded for Income Collection and Cash
Management were enough to push its overall result beyond last year’s
total to a very strong 6.16. It is clear that BNP Paribas is beginning to
make serious inroads into the Australian market. By outperforming in the
survey, it shows that it is effectively managing both growth and existing
client services and is well positioned to expand further.
BNP Paribas Securities Services
60 Castlereagh Street,
Sydney, NSW, 2000
Andreas Scharbach
Tel: +61 2 9222 0280
andreas.m.scharbach@bnpparibas.com
Extracted from Global Custodian research data
3
GLOBAL CUSTODIAN
AGENT BANKS IN MAJOR MARKETS SURVEY 2014
BNP PARIBAS
Austria
AUSTRIA
SETTLEMENT
ASSET
SERVICING
RELATIONSHIP &
CLIENT SERVICE
TECHNOLOGY
ANCILLARY
SERVICES
VALUE
DELIVERED
BNP Paribas Securities Services
5.88
5.91
6.13
6.00
5.81
5.82
Citi
5.47
5.63
5.33
5.42
5.47
5.20
Erste Group Bank
5.87
5.54
5.85
5.67
5.72
5.54
Raiffeisen Bank International
5.60
5.61
5.72
5.55
5.60
5.74
UniCredit Bank Austria
5.27
5.41
5.28
5.12
5.20
4.96
Market Review
BNP Paribas Securities Services
Austria itself is a small market with limited activity, further diminished
by the closing of the derivatives market earlier in the year. However, as
the home country for three of the major Central Europe regional agent
bank providers, it is more “crowded” than might be expected. Bear in
mind the close ties into the German market, and it is clear that Vienna
simply has more agent bank providers than it can realistically support.
Nor is it clear from the scores that all providers are properly focused
on the local market challenges and opportunities.
Scores this year are lower in most categories including Value Delivered, Relationship Management and Client Service. The overall decline
is relatively manageable and is in part mitigated by better scores in
Asset Servicing. Announcement of changes to the Austrian tax reclaim
procedure—to be implemented as of January 2015, gave banks an opportunity to position themselves as being on top of market information
that a number of providers successfully exploited. Next year will show
the outcome of their efforts.
The share of responses (16%) for BNP Paribas was higher than its estimated
share of the market (7%). The bank has evidently benefited from a comprehensive set of client evaluations. Despite client scores suggesting a slight
decline in most areas for BNP Paribas, it has majorly outperformed both the
Austrian and global score averages in all service categories. An impressive
0.57 points ahead of the Austrian average for Relationship Management,
there is no denying BNP Paribas’ stellar performance in this regard. A large
number of clients commend the “reachable staff, quality of the people, and
the dedication of their relationship management in particular.” One very
satisfied client, when asked what area of BNP Paribas stands out as its single
strongest performing area, stated, “The people.”
Extracted from Global Custodian research data
BNP Paribas Securities Services
Europa-Allee 12
Frankfurt am Main
Cornelia Raif
Tel: +49 6915 20 5517
cornelia.raif@bnpparibas.com
4
GLOBAL CUSTODIAN
AGENT BANKS IN MAJOR MARKETS SURVEY 2014
BNP PARIBAS
Belgium
BELGIUM
SETTLEMENT
ASSET
SERVICING
RELATIONSHIP &
CLIENT SERVICE
TECHNOLOGY
ANCILLARY
SERVICES
VALUE
DELIVERED
BNP Paribas Securities Services
5.86
5.42
5.60
5.50
5.39
5.48
Citi
5.45
5.43
5.73
5.40
5.53
5.44
Deutsche Bank
6.06
5.79
5.93
5.69
5.77
5.82
KBC Securities Services
5.73
5.60
5.55
5.85
5.69
5.68
Market Review
BNP Paribas Securities Services
The Belgian market is keeping up well with global reform initiatives. It
will move to a T+2 settlement cycle on October 6, 2014. In anticipation
of the launch of TARGET2-Securities, the National Bank of Belgium
is to implement a new settlement platform with several T2S-compliant
features by the end of 2014. The development of the new platform,
named RAMSES, was completed in 2013, and testing with participants
is under way.
Since the beginning of the year, Belgium has taken the final steps to
dematerialize its securities market. Since the start of the year, physical securities have been automatically converted into dematerialized securities
in accordance with Belgian law. Only two legal forms now exist: dematerialized and nominative securities. Physical shares still in circulation
are deemed to be proof of ownership of dematerialized securities held
by their respective issuers on behalf of “still-to-be-identified” investors.
In terms of its scores, the Belgian market is broadly representative of
the survey as a whole, beating the global survey average by a couple of
basis points and with more or less the same set of functions topping and
tailing the scores. Commitment to Securities Services by Belgian providers
is rated highly at 5.93, 0.40 points above the global survey average, while
competitiveness of rates paid/charged on balances is at the bottom of
the table, but it’s still only 0.10 points below the global survey average.
For the bulk of service functions, the divergence between the two is
less than 0.10 points. Exceptions in Belgium’s favor include a willingness
to offer third-party cash management vehicles, where the market is 20
basis points ahead of the 5.27 global average. Lack of this facility is a
cause for customer complaint in several markets. Settlement and all its
sub-functions also notably outperform the global average, with failed
trade resolution seen as a particular strength. By contrast, Tax Reclaims
and, in particular, the ability of providers to obtain relief at source, are
seen as relative weaknesses.
BNP Paribas accounts for 33% of responses received for the Belgian
market. The bank estimates its share of the sub-custody market at 3035%. It has registered a significant increase (0.23 points) in its overall
score, with results stronger across all service areas, except for Reporting,
which sees a slight drop. This leaves the bank just short (0.07 points)
of the Belgian market average. Its strongest results are for Settlement.
With a score of 5.86, BNP Paribas exceeds both the Belgian and global
survey averages. Its lowest score is for Income Collection, but at 5.25
it is still in acceptable range. Broker-dealers, who account for 30% of
responses, are the most generous client sub-group, awarding the bank
ratings above 6.00 (very good) for both Settlement and Relationship
Management. “The relationship we enjoy with BNP Paribas at all levels
is very strong,” says one U.K. broker. Not all comments are unconditionally positive. “BNP has a strong relationship management team
but can struggle with providing value-added services that are unique
to our needs,” says one global custodian. “Our RM is very proactive in
managing our account. However, they need to be more flexible when
considering our requests,” comments another. Tax is identified as an
area where more than one client feels the bank needs to up its game in
order to “meet expectations.” Nevertheless, BNP Paribas is considered
“proactive in identifying and meeting our different business needs.”
Extracted from Global Custodian research data
BNP Paribas Securities Service
Boulevard Louis Schmidt
2 - 1040 Brussels
Nathalie Prunier
Tel : +33 142 984 213
nathalie.prunier@bnpparibas.com
5
GLOBAL CUSTODIAN
AGENT BANKS IN MAJOR MARKETS SURVEY 2014
BNP PARIBAS
France
FRANCE
SETTLEMENT
ASSET
SERVICING
RELATIONSHIP &
CLIENT SERVICE
TECHNOLOGY
ANCILLARY
SERVICES
VALUE
DELIVERED
BNP Paribas Securities Services
5.86
5.62
5.82
5.71
5.55
5.63
CACEIS
5.24
5.15
5.08
5.38
5.11
5.12
Citi
5.57
5.59
5.93
5.59
5.65
5.60
Deutsche Bank
6.03
5.70
5.93
5.55
5.65
5.87
Société Générale Securities Services
5.67
5.84
5.76
5.75
5.45
5.49
Market Review
BNP Paribas Securities Services
The French market has demonstrated almost universal improvement,
according to the survey client base. Only one service area has declined in
terms of the overall market average: Value and Commitment. Competitiveness of fees charged and the perceived value received in return for
fees paid stand out as the key contributor to this sole service area decline.
Client dissatisfaction in this regard—a challenge that is not unique to
France this year—appears more common amongst those French competitors who possess a higher proportion of large and very large clients.
As in other European countries, the prospect of T2S’s implementation
appears to have added pressure to market participants. In addition, with
the introduction of a T+2 settlement cycle by the Central Securities Depository Regulation effective from October 6, it is possible that appropriate
pricing has become more difficult to implement within the French market.
Tax Reclaims and Relationship Management stand out as the French
market’s strongest performing areas, with both average category scores
substantially surpassing their global equivalents. Income Collection, despite improving its average score since 2013, remains a weak point, marking the region’s sole poor performance relative to other markets globally.
BNP Paribas’ clients have recognized an improvement across all services areas offered this year. Such a strong performance places the bank
above the French average in all categories excluding Income Collection,
for which it very narrowly missed surpassing the average. The same is
true of client satisfaction regarding Income Collection compared to the
global survey average.
The considerable increase in scores for Client Service and Relationship Management is clearly reflected in the satisfied comments of several
clients, who state that BNP Paribas’ “responsiveness to inquiries is routinely excellent.” Praised for being “proactive in identifying and meeting
our different business needs,” the bank’s “client-friendly” nature means
that it’s “always supportive in resolving problems.” By focusing on the
Notification of Income Due subcategory for clients with assets between
$100 million and $1 billion under management, BNP Paribas could easily
and comprehensively confirm its reputation as market leader.
Extracted from Global Custodian research data
BNP Paribas Securities Services
Grand Moulins de Pantin
9 rue du Débarcadère
93500 Pantin
Nathalie Prunier
Tel: + 33 1 42 98 42 13
nathalie.prunier@bnpparibas.com
6
GLOBAL CUSTODIAN
AGENT BANKS IN MAJOR MARKETS SURVEY 2014
BNP PARIBAS
Germany
GERMANY
SETTLEMENT
ASSET
SERVICING
RELATIONSHIP &
CLIENT SERVICE
TECHNOLOGY
ANCILLARY
SERVICES
VALUE
DELIVERED
BNP Paribas Securities Services
5.78
5.63
5.85
5.56
5.57
5.65
CACEIS
4.53
4.58
4.71
5.03
4.95
4.56
Citi
5.60
5.52
5.64
5.55
5.55
5.44
Commerzbank
5.74
5.07
5.18
5.46
5.78
5.15
Deutsche Bank
5.45
5.40
5.61
5.47
5.39
5.42
HSBC
6.24
5.92
6.20
6.23
6.08
6.13
Market Review
BNP Paribas Securities Services
Rather surprisingly, 2014 saw the German market performing below the
global survey average in all categories. In total, Germany’s scores declined
by 0.28 points from last year’s level of 5.78. All but one market participant suffered declines that, in most cases, correlated to this market shift.
The German market in 2014 has evidently faced a number of local
pressures. Relative to other markets, its two worst-performing categories were in Value and Commitment and Corporate Actions, while Tax
Reclaims remains an area of relative complexity. As well as working on
issues related to T2S, German banks are also wrestling with the implications of the Trennbankengesetz or Banking Separation Law.
Market participants highlighted the challenge of working to formulate and monitor the implementation of harmonized rules for corporate
actions, especially with those involving pending settlement transactions.
As a result of all of these factors, there is perhaps a state of uncertainty
surrounding the German market and its future direction. Scores for
Corporate Actions were 0.37 points lower than in 2013. Tax Reclaims,
while offering opportunities for providers to distinguish themselves, also
posted noticeably weaker results.
Overall uncertainty may even have had an impact on how fees and
other rates are being negotiated. The data, showing a fall of 0.36 points
in scores for Value Delivered, corresponds strongly with the anecdotal
comments to this effect.
Despite high scores relative to local and global competitors, the institution
with the second-largest share of the German market appears to have been
affected by the challenges of local regulatory initiatives exhibited in 2014.
With a 23% share of the responses for the German market, BNP Paribas’
decline in every single category this year, no doubt, reflects something of
the ubiquity of local difficulties.
Its most significant decline was in Corporate Actions (-0.70), while
the single area for which the bank was awarded a notably lower score
than its competitors—0.18 below the German average—was Cash Management. Declining scores are disappointing. Nevertheless, BNP Paribas
still obtained a higher overall score than both the German and global
averages.
Extracted from Global Custodian research data
BNP Paribas Securities Services
Europa-Allee 12
60327 Frankfurt am Main
Cornelia Raif
Tel: +49 6915 20 5517
cornelia.raif@bnpparibas.com
7
GLOBAL CUSTODIAN
AGENT BANKS IN MAJOR MARKETS SURVEY 2014
BNP PARIBAS
Greece
GREECE
SETTLEMENT
ASSET
SERVICING
RELATIONSHIP &
CLIENT SERVICE
TECHNOLOGY
ANCILLARY
SERVICES
VALUE
DELIVERED
BNP Paribas Securities Services
5.80
5.68
5.80
5.44
5.60
5.45
Citi
5.53
5.41
5.68
5.54
5.44
5.45
Eurobank
5.96
5.82
6.12
5.89
5.84
5.85
Geniki Bank Securities Services
5.87
5.35
5.74
5.88
5.56
5.54
HSBC
5.45
5.36
5.54
4.89
5.12
5.41
National Bank of Greece
5.76
5.42
5.49
5.23
5.35
5.24
Market Review
BNP Paribas Securities Services
The Greek market is highly fragmented given its small size. This obviously reflects the moves away from local Greek banks by many foreign investors during and after the financial crisis. However, the global
banks have failed to remove local players from the market entirely. In
this year’s survey, they accounted for around one-third of weighted
responses, though these were mostly smaller clients. Given the relative lack of activity, scores remain generally good. Across the market
the average score of 5.59 was marginally ahead of the global score
of 5.58. Individually, three banks beat that score. Settlement, Client
Service and Relationship Management were the highest scoring areas,
while Technology lagged the global average, and Cash Management
was a problem for some clients. Regulations, particularly in relation to
taxation, continue to evolve. More consolidation clearly is a possibility,
but the local banks are working hard to recover their position while also
defending their domestic client base. Now that their recapitalization is
complete, they may be able to persuade some former clients to return.
BNP Paribas has a broad base of cross-border clients in Greece. Total
assets are small, a reflection of the market itself. BNP Paribas enjoys the
support of many leading global custodians and broker-dealers. At 5.66,
overall scores this year are consistent with 2012 and 2013. Main areas
of relative strength continue to be in Client Service and Relationship
Management. The latter is praised by clients for “proactivity,” while BNP
Paribas also earned positive comments for its “responsiveness and overall
strong service.”
BNP Paribas attracts positive comments for “good quality of tax
alerts/information,” as noted by one important client. The information
flow to its clients is a factor in high scoring in asset servicing overall.
Settlement also has the potential for change, with Greek bonds being
included in the first wave of TARGET2-Securities (T2S). Scores in this
area were strong, but many clients have very little activity. It will be
interesting to see whether T2S impacts Cash Management, which was
one weaker area for BNP Paribas, particularly with broker-dealer clients.
BNP Paribas Securities Services
94 V. Sofias Ave & 1 Kerasountos St
115 28 Athens
Kelly Kakanaki
Tel: +30 210 7468 527
kelly.kakanaki@bnpparibas.com
Extracted from Global Custodian research data
8
GLOBAL CUSTODIAN
AGENT BANKS IN MAJOR MARKETS SURVEY 2014
BNP PARIBAS
Hong Kong
HONG KONG
SETTLEMENT
ASSET
SERVICING
RELATIONSHIP &
CLIENT SERVICE
TECHNOLOGY
ANCILLARY
SERVICES
VALUE
DELIVERED
BNP Paribas Securities Services
6.59
6.30
6.55
6.38
6.23
6.46
Citi
5.61
5.60
5.46
5.16
5.53
5.33
DBS Bank
6.04
6.11
6.33
5.56
6.07
6.16
Deutsche Bank
5.69
5.43
5.86
5.60
5.51
5.73
HSBC
5.84
5.67
5.79
5.82
5.63
5.72
Standard Chartered Bank
5.39
5.46
5.78
5.28
5.46
5.57
Market Review
BNP Paribas Securities Services
Many of the developments in the Hong Kong market over the past year
have involved its linkages with other markets, notably Mainland China.
In April this year, the Securities and Futures Commission (SFC) and
the China Securities Regulatory Commission (CSRC) jointly approved
in principle a pilot program to establish mutual stock market access
between Hong Kong and Mainland China, to be called Shanghai-Hong
Kong Stock Connect. The program is expected to start in October.
The SFC also proposes to introduce a mutual recognition platform
for locally domiciled funds in Hong Kong and Mainland China. Qualified SFC-authorized funds domiciled in and operating from Hong Kong
would enjoy the status as “recognized Hong Kong funds,” and qualified
Mainland funds would enjoy the status of “recognized Mainland funds.”
These funds could then obtain authorization to be sold directly in each
other’s markets.
On the local front, the Securities and Futures (Amendment) Ordinance 2014 was announced on April 4, 2014. Its objective is to establish
a regulatory framework for the OTC derivatives market in Hong Kong.
In terms of its survey results at a market level, Hong Kong is viewed
as among the more efficient major markets, with its overall market average outperforming the global survey average by 0.15 points. Unusually,
the biggest gap (0.33 points) is for Value Received for Fees Paid, an area
where many markets are brought low. Only the Handling of Relief at
Source and Willingness to Offer Third-Party Cash Management Vehicles
fall below the global average.
BNP Paribas accounts for 18% of survey responses submitted for Hong
Kong. In a relatively high-scoring market, the bank manages to outperform quite significantly, beating the Hong Kong market average by 0.68
points. This also reflects an increase in the bank’s score year on year of
0.21 points. Unusually for providers in the ABMM survey, BNP Paribas
has managed to achieve scores above 6 (very good) in all service areas.
Several of these are above 6.50, including Income Collection, Settlement,
Relationship Management, and Client Service. “Although the fees are
not the lowest, we appreciate BNP HK’s effort to understand our business and to build products that suit our needs,” says one Asian broker.
Broker-dealers account for the bulk of responses (72%) for BNP Paribas
and are also the most generous, though no sub-group scores the bank
below 6 (very good).
Extracted from Global Custodian research data
BNP Paribas Securities Services
21/F., PCCW Tower, Taikoo Place
979 King’s Road Hong Kong
James O’Sullivan
Tel: +852 3197 3338
james.osullivan@bnpparibas.com
9
GLOBAL CUSTODIAN
AGENT BANKS IN MAJOR MARKETS SURVEY 2014
BNP PARIBAS
Ireland
IRELAND
SETTLEMENT
ASSET
SERVICING
RELATIONSHIP &
CLIENT SERVICE
TECHNOLOGY
ANCILLARY
SERVICES
VALUE
DELIVERED
BNP Paribas Securities Services
6.09
5.92
5.83
5.61
5.44
5.85
Citi
5.62
5.67
5.58
5.46
5.50
5.41
HSBC
5.41
5.36
5.81
5.52
5.28
5.27
Market Review
BNP Paribas Securities Services
Despite having had the euro as its currency and a rapidly growing
“offshore” based financial services industry, Ireland has not yet developed the kind of capital markets that would place it properly within
the major market category. It has certainly broken free from being an
adjunct of the London market but has not yet achieved the kind of scale
that prompts development of significant agent bank service provision.
As a result, Ireland continues to get fewer responses within the Agent
Bank Survey than any other country. This makes it more volatile in
terms of scores and means individual responses, good or bad, can have
a significant impact.
As a part of the euro area, TARGET2-Securities is of relevance but
may yet prove more of an opportunity than a threat. Following the
financial crisis, banks providing services here are now exclusively global
in nature with no local banks remaining in the business. That means
that it will benefit from their experience and investment in support of
bigger markets and bigger businesses. However, the relative lack of
competition has not held back client perceptions of service. Overall
scores this year, though down very slightly on 2013, remain above the
survey average, albeit only just. Asset Servicing saw important gains
in all aspects and Cash Management scores also improved. However,
Value and Commitment was weaker than a year ago by some margin.
While there are no specific comments from clients on this, the limited
scale of business may make it hard for providers to justify the kinds of
discounts for volume that are common in larger markets.
Scores across different categories are in a fairly narrow range
around the overall average within a band of 0.15 points. This again is
indicative of there being relatively little activity against which to make
meaningful assessments of performance.
BNP Paribas has a very small business in Ireland compared with other
countries. Its market share by weight of responses was 22.6%, but this
reflected the overall dearth of business rather than a large number of clients.
Broker-dealers account for just over half of responses both by number and
weight, with banks providing the balance of respondents. Broker-dealers offered higher scores overall, and the difference was quite material in a number
of areas, most specifically Value and Commitment. One client praised BNP
Paribas for its “Excellent service during the review period” while also citing
its investment in Technology and Connectivity as being a particular strength,
which they hope will continue. As a result, scores for this category remain
comfortably above the country average. Overall only two of ten areas saw
BNP Paribas score below the Ireland average. Reporting and Corporate Actions both also declined from 2013 levels, in the case of Reporting by quite
a considerable amount. However, given the small number of responses, as
well as the fact that scores remain close to market average levels, this should
not be considered a cause for particular concern. In other areas, BNP Paribas outperformed its competition materially in Value and Commitment as
well as Relationship Management. A recent reorganization appears to have
given clients more visibility to key relationship personnel while not affecting
the highly regarded operational staff. The fact that its competitors are also
global banks makes the scores for Commitment particularly revealing and
encouraging. While the market is likely to remain small, there is no doubt
that BNP Paribas is well positioned to grow further within it.
Extracted from Global Custodian research data
BNP Paribas Securities Services
Trinity point 10-11 - Leinster Street South - Dublin 2
Julien Kasparian
Tel +44 (0) 20 74 10 1269
julien.kasparian@bnpparibas.com
10
GLOBAL CUSTODIAN
AGENT BANKS IN MAJOR MARKETS SURVEY 2014
BNP PARIBAS
Italy
ITALY
SETTLEMENT
ASSET
SERVICING
RELATIONSHIP &
CLIENT SERVICE
TECHNOLOGY
ANCILLARY
SERVICES
VALUE
DELIVERED
BNP Paribas Securities Services
5.56
5.60
5.83
5.50
5.43
5.66
Citi
5.34
5.36
5.65
5.29
5.49
5.41
Deutsche Bank
5.92
5.66
5.74
5.56
5.60
5.62
Intesa SanPaolo
6.06
5.56
5.58
5.74
5.69
5.42
Société Générale Securities Services
5.68
5.84
5.92
5.93
5.76
5.48
Market Review
BNP Paribas Securities Services
As the largest major market to be involved in the first wave of T2S,
multiple survey participants have highlighted what a challenging period 2014 has been for the Italian market. The necessary technical
enhancements involved in addressing T2S are reported to have caused
some disruptions to the day-to-day management of business. Despite
this, the Italian market’s overall score has actually increased since
last year by 0.02 points. In particular, Relationship Management has
increased from 5.71 to 5.85 this year, placing Italian services in this
area firmly above the standards perceived in other markets. Similar improvements were acknowledged by clients with regards to all
areas of Asset Servicing which, through a boost of more than 0.30
points across all questions, placed Italy comfortably ahead of the
global survey average. The Italian market seems to have benefited
from significant competition among non-domestic providers, who
are seeking to profit from disruption caused by the financial crisis to
some of the local banks.
Scores were ever so slightly up this year for BNP Paribas. Despite large
gains in Tax Reclaims, Income Collection and Relationship Management,
a sharp drop in Value and Commitment reduced the overall gain compared
to 2013 to only 0.03 points. Although this improvement was not enough
to see the bank cement its reputation as a market outperformer in Italy,
BNP Paribas has done well to maintain such competitive standards.
Cash Management stands out as BNP Paribas’ Achilles’ heel, with
unusually low scores awarded for its Willingness to Offer Third-Party
Cash Management Vehicles such as STIF funds and fiduciary deposits.
With such an enviably high proportion of very large clients, however,
the low scores awarded for “competitiveness of fees and rates charged”
are not quite as surprising as they may otherwise have been.
Extracted from Global Custodian research data
BNP Paribas Securities Services
Via Ansperto 5
20123 Milan
James Woods
Tel: +39 02 7247 4251
james.woods@bnpparibas.com
11
GLOBAL CUSTODIAN
AGENT BANKS IN MAJOR MARKETS SURVEY 2014
BNP PARIBAS
Netherlands
NETHERLANDS
SETTLEMENT
ASSET
SERVICING
RELATIONSHIP &
CLIENT SERVICE
TECHNOLOGY
ANCILLARY
SERVICES
VALUE
DELIVERED
BNP Paribas Securities Services
5.74
5.44
5.58
5.43
5.30
5.45
ABN Amro Clearing Bank
4.65
4.75
4.89
5.39
5.23
4.83
Citi
5.72
5.62
5.79
5.63
5.67
5.55
Deutsche Bank
6.10
5.84
6.08
5.75
5.82
5.87
Market Review
BNP Paribas Securities Services
Many of the developments in the Dutch securities market over the past
year or so and in the months ahead will be familiar to followers of other
Euronext markets. The Netherlands will move its settlement cycle to
T+2 on October 6, 2014, and a local market working group has been
established to ensure a smooth transition. Euroclear Netherlands, the
Dutch CSD, has begun the necessary adaptations for migration to T2S
as of 2015.
There are, however, specific legislative and regulatory developments
that foreign investors should be aware of. In February 2013, for example, Euroclear Netherlands introduced a settlement penalty regime if the
average settlement efficiency rate is not maintained at a minimum of
98%. Up until now, no penalty has been applied, as settlement efficiency
rates have been above the threshold.
As a whole, the Netherlands hugs fairly close to the global survey
average. Across all questions its highest score is 5.83 for Commitment
to Securities Services by Provider, while the lowest—5.12 and 5.13—are
about money: Competitiveness of Fees Charged and Rates Charged/
Paid on Balances.
With its own informal market-share estimate at 40-45%, BNP Paribas
accounts for 25% of responses received for the Netherlands. Of these,
68% are from banks and the bulk of the remainder from broker-dealers.
Interestingly, both sub-categories give BNP Paribas the same overall score,
though each emphasizes different strengths and weaknesses. Clients are
on the whole complimentary in their comments, but, despite the fact that
BNP Paribas services all the Euronext markets out of the same hub, the
Netherlands operation is not seen as one of the best performers in its
network. The overall score of 5.49, though 0.09 points down on 2013, is
perfectly acceptable, but it remains 0.06 points below the Dutch market
average. Only in the areas of Settlement and Corporate Actions does the
bank exceed the service-level market average. An effective Relationship
Management team, however, seems to keep most clients satisfied. “Global
and local RM and Client Services do not hesitate to set up physical meetings to assist clients and get a mutual understanding of operational flows
to find solutions,” says one new European bank client.
Extracted from Global Custodian research data
BNP Paribas Securities Services
Herengracht 477
1017 BS Amsterdam
Nathalie Prunier
Tel: +33 1 42 98 42 13
nathalie.prunier@bnpparibas.com
12
GLOBAL CUSTODIAN
AGENT BANKS IN MAJOR MARKETS SURVEY 2014
BNP PARIBAS
Portugal
PORTUGAL
SETTLEMENT
ASSET
SERVICING
RELATIONSHIP &
CLIENT SERVICE
TECHNOLOGY
ANCILLARY
SERVICES
VALUE
DELIVERED
BNP Paribas Securities Services
5.56
5.33
5.49
5.47
5.39
5.33
Citi
5.33
5.38
5.46
5.42
5.48
5.35
Deutsche Bank
6.10
5.69
6.04
5.76
5.76
5.98
Millennium bcp
5.79
5.64
5.72
5.72
5.71
5.48
Santander Investment
5.69
5.68
5.91
5.69
5.72
5.67
Market Review
BNP Paribas Securities Services
The past 12 months in Portugal have not seen the implementation of
any significant regulatory, operations or infrastructure developments,
though there are a few in the offing. In October, in common with several other major markets, the Portuguese Securities Market will move
from T+3 to a T+2 settlement cycle. The challenge is under control for
most providers.
The local CSD, Interbolsa, has also begun the necessary adaptation
in preparation for migration to T2S.
Deutsche Bank, nevertheless, points to various changes in taxation
that should not be overlooked. These include an extension of the exemption of the withholding tax regime applicable to foreign entities residing
in a country with either a double taxation agreement or tax exchange of
information agreement in force with Portugal, as well as an extension
of withholding tax on interest to monetary debt securities. A number
of market practice groups are also working on the implementation of
harmonized rules for corporate actions.
Portugal in most respects stays close to the survey average with a score
range across all questions between 0.24 and -0.19 points of the global
norm. Despite a competitive environment with five providers receiving
sufficient responses for a rating in what is after all one of the smaller EU
markets, the overall market average remains just shy of its global equivalent. The gap between the best- and worst-scoring providers remains
relatively narrow, however, with 0.42 points separating them and with
the lowest-scoring provider (5.42) still able to claim a respectable result.
Accounting for 39% of survey responses for Portugal, BNP Paribas
has seen scores up in five service areas and down in another five,
leaving its overall result down by 0.04 points and 0.14 points below
the Portuguese market average. Its scores at a service area level are in
a fairly narrow range from 5.23 for Corporate Actions at the bottom
end and 5.56 for Settlement at the top end. Unusually, the bank scores
highest not just among larger clients with AUM of $1-10 billion but
also those with fewer than 100 transactions a month. Its overall result
is, in fact, brought down by the most active respondents—those with
more than 20,000 transactions a month—who award scores averaging
below 5.00 (good). Fee levels are cited by one large Asian broker as a
problem: “BNP Portugal charge higher fees than some other market
players. Limited reduction on negotiation.” Interaction with clients is
generally seen as positive. “Responsiveness to inquiries is routinely
excellent,” says one global custodian.
Extracted from Global Custodian research data
BNP Paribas Securities Services
Edifício ART’S, Avenida D. João II,
Lote 1.18.01, Bloco B 9º,
1998-028 Lisbon
Nathalie Prunier
Tel: +33 1 42 98 42 13
nathalie.prunier@bnpparibas.com
13
GLOBAL CUSTODIAN
AGENT BANKS IN MAJOR MARKETS SURVEY 2014
BNP PARIBAS
Singapore
SINGAPORE
SETTLEMENT
ASSET
SERVICING
RELATIONSHIP &
CLIENT SERVICE
TECHNOLOGY
ANCILLARY
SERVICES
VALUE
DELIVERED
BNP Paribas Securities Services
6.53
6.20
6.33
6.33
6.16
6.04
Citi
5.08
5.22
5.18
5.26
5.18
5.07
DBS Bank
5.91
5.95
5.67
5.63
5.77
5.70
Deutsche Bank
5.77
5.51
5.94
5.76
5.47
5.68
HSBC
5.61
5.63
5.79
5.91
5.48
5.62
Standard Chartered Bank
5.63
5.47
5.82
5.39
5.62
5.56
United Overseas Bank
5.30
5.49
5.06
4.50
5.14
4.92
Market Review
BNP Paribas Securities Services
The Singapore Exchange has announced a major revamp of market fees for
clearing and settlement. As of June 1, 2014, the clearing fee was reduced
from 0.04% to 0.0325%, and a $600.00 clearing fee cap is being removed.
The settlement fee for transactions not conducted on SGX is 0.015% of
settlement value (minimum S$75.00) per settlement instruction. Fee levels
are designed to encourage “on-exchange” trades.
In February last year, the People’s Bank of China appointed the Industrial and Commercial Bank of China as the clearing bank for renminbi in
Singapore. The Monetary Authority of Singapore will work closely with both
banks to implement the RMB clearing arrangement. In May 2013, meanwhile, the SGX launched depository services for RMB-denominated bonds.
As part of continued efforts to improve post-trade infrastructure in the
market, SGX will be launching open access connectivity to SGX Post Trade
System via a clearing and settlement API. API connectivity is scheduled to
start operations in the first quarter of 2015.
With so many sub-custodians competing for their share of a limited
market, it is not surprising to find that the Singaporean providers as a whole
achieve average service levels above the global survey averages in all service
areas except Tax Reclaims. The market’s scores are also in a fairly narrow
band between 5.82 at the top end for Income Collection and 5.38 at the
lower end for Tax Reclaims. However, the range of scores among individual
providers is wider than in many markets, ranging from 5.14 to 6.27.
BNP Paribas, which accounts for 18% of responses received for Singapore, can be pleased with its results this year. For the past three years,
its scores have been heading to levels that are hard to maintain, and yet
it has once again improved its results in seven out of ten service areas,
bringing its overall score to an impressive 6.27. Its best score is in the
core area of Settlement, where it beats the market average of 0.80 points
and the global survey average by 0.89. Broker-dealers, who make up
the majority of respondents for BNP Paribas (68%), seem particularly
impressed with the service received for Tax Reclaims, giving the bank
the maximum possible score in his area. “Our custodian provides a very
good service level, and team members adopt a very proactive approach,”
comments one European bank client.
Extracted from Global Custodian research data
BNP Paribas Securities Services
20 Collyer Quay
4th Floor
Singapore 049319
Lily Lim
Tel +65 6210 4972
lily.lim@bnpparibas.com
14
GLOBAL CUSTODIAN
AGENT BANKS IN MAJOR MARKETS SURVEY 2014
BNP PARIBAS
Spain
SPAIN
SETTLEMENT
ASSET
SERVICING
RELATIONSHIP &
CLIENT SERVICE
TECHNOLOGY
ANCILLARY
SERVICES
VALUE
DELIVERED
BNP Paribas Securities Services
5.56
5.47
5.72
5.45
5.42
5.58
Banco Bilbao Vizcaya Argentaria
5.59
5.51
5.58
5.47
5.56
5.33
Citi
5.71
5.16
5.50
5.75
5.48
5.47
Deutsche Bank
5.62
5.45
5.60
5.39
5.32
5.45
Banco Santander
5.54
5.36
5.40
5.34
5.32
5.39
Market Review
BNP Paribas Securities Services
The Spanish market has long been an anomaly in Europe, with a very
particular approach to trading and post-trade activities. It has suffered
severe market criticism for tardiness in implementing Markets in Financial Instruments Directive (MiFID), and its apparent protectionism for
Bolsas y Mercados Españoles (BME). Methods used to delay progress
have included some that affect post-trade performance, specifically
matching and settlement. That is finally changing with the planned
introduction of a central counterparty (CCP). However, according to
one senior bank executive, the retention of a registration component,
reflecting the controlling instincts of the regulator, is to the detriment
of the smooth functioning of the market; it is also a particular inconvenience to broker-dealers. Nonetheless, proposed changes are leading
providers to devote serious efforts to getting technology and operations
structured to allow them to deliver better service to clients.
Cross-border clients, in turn, seem to be relieved that there is finally
some progress, so the penalty applied to the Spanish market seems to
be diminishing. Providers that are part of a global group have some
advantages in terms of familiarity with the kind of structures that will
emerge, but to date, they—like others—are simply focused on keeping
clients informed of progress. Actual client benefits are still some way off.
The situation is similar with Tax Reclaims. The process for bonds
has improved markedly. That for equities has seen investment, but presentation of correct documents still remains a problem in some cases.
As a result, scores for Asset Servicing remain relatively depressed.
BNP Paribas maintains an enviable list of large global custodian and broker-dealer clients. Based on responses received, as well as its own analysis,
the bank has the largest share of agent banks in Spain. Clients remain
generally satisfied, though scores are down this year and are marginally
lower than in 2012. Seven of ten categories posted lower scores, while three
were higher. The latter included Client Service, where clients highlighted
excellence in market knowledge and attention to detail, though some would
prefer a more proactive approach at times. Tax Reclaims also saw higher
scores. Offsetting this were reduced scores for Technology inter alia. Here
one client felt the system lacked flexibility, while another had been troubled
by recent stability issues, which is probably a one-off concern. BNP Paribas
has set the standard in Spain for many years and this year again recorded
the best scores from the most clients.
Extracted from Global Custodian research data
BNP Paribas Securities Services
C / Ribera del Loira 28
28042 Madrid
Soledad Lecube
Tel: + 34 91 388 8716
soledad.lecube@bnpparibas.com
15
GLOBAL CUSTODIAN
AGENT BANKS IN MAJOR MARKETS SURVEY 2014
BNP PARIBAS
Switzerland
SWITZERLAND
SETTLEMENT
ASSET
SERVICING
RELATIONSHIP &
CLIENT SERVICE
TECHNOLOGY
ANCILLARY
SERVICES
VALUE
DELIVERED
BNP Paribas Securities Services
5.84
5.60
5.95
5.76
5.86
5.72
Citi
5.22
5.35
5.68
5.18
5.47
5.45
Credit Suisse
5.51
5.41
5.45
5.29
5.44
5.29
SIX Securities Services
5.75
5.61
5.52
5.57
5.56
5.73
UBS
5.79
5.50
5.48
5.70
5.49
5.64
Market Review
BNP Paribas Securities Services
It now appears inevitable that the Swiss regulatory regime for central
counterparties is to be equivalent to EU regulation, and market participants are working to accommodate the new EU settlement regime
imminent under T2S. Despite having to deal with the challenges posed
by these changes, the Swiss market saw improved scores compared to
2013, achieving an average 5.54—very close to the global survey average. With generally solid scores across all categories, Switzerland has
been a bastion of stability as far as network managers are concerned.
Competitively, the market is still dominated, as a whole, by the
two large Swiss banks. However, some large clients are looking at
different options, particularly as the fallout from the financial crisis
continues to bear down on both Credit Suisse and UBS. Switzerland
is an attractive market for services well beyond sub-custody. That is
the bigger prize for new providers, but sub-custody can represent an
attractive starting point. The local banks seem likely to be challenged
even further in the future.
BNP Paribas achieved high scores relative to Swiss and global averages,
achieving a particularly good result—above 6.00 (very good)—in Reporting.
Against the Swiss market, it beat the average in all categories. Against the
global average, best scores were seen again in Reporting (+0.46 points).
With a 19% share of Swiss survey responses, BNP Paribas has benefitted
from a client base that is predominantly made up of medium-sized organizations. The most dissatisfied feedback comes from the very large or very small
clients, whose impact is less significant. The firm appears very well prepared
for the shift toward T2S and T+2 settlement, having already developed an
automatic realignment service to move T2S-eligible securities between the
domestic Swiss and T2S holding lines. Such preparedness certainly reflects
the comments of one satisfied client, who praised the bank in particular for
its “forward thinking.”
Extracted from Global Custodian research data
BNP Paribas Securities Services
Selnaustrasse 16
CH-8022 Zürich
Neil Collins
Tel: +41 58 212 6320
neil.collins@bnpparibas.com
16
GLOBAL CUSTODIAN
AGENT BANKS IN MAJOR MARKETS SURVEY 2014
BNP PARIBAS
United Kingdom
UNITED KINGDOM
SETTLEMENT
ASSET
SERVICING
RELATIONSHIP &
CLIENT SERVICE
TECHNOLOGY
ANCILLARY
SERVICES
VALUE
DELIVERED
BNP Paribas Securities Services
5.89
6.04
6.16
6.02
5.80
6.07
BNY Mellon
5.45
5.19
5.38
5.40
5.06
5.38
Citi
5.73
5.64
5.78
5.72
5.60
5.66
Deutsche Bank
5.63
6.32
5.60
5.62
5.59
6.13
HSBC
5.66
5.41
5.67
5.75
5.49
5.43
Market Review
BNP Paribas Securities Services
The U.K. saw a meaningful gain in scores compared with 2013. Overall, the average across all providers improved by some 0.20 points and
was higher than the survey average for the first time in some years.
The principal reason for the improvement was the fact that scores in
all aspects of asset servicing were materially better than a year ago.
While not all providers showed the same gains, the most important
agent banks saw better scores, especially for Income Collection and
Tax Reclaims. Cash Management, an area that recorded scores little
better than 5.00 a year ago, posted a strong gain, though as in many
other markets, overall low interest rates are still a drag on client perceptions. Technology scores improved even from the good levels in
2013. Overall the U.K. continues to benefit from competition among
providers, attracted not so much to offer agent bank services as to
provide a wide array of products to a large sophisticated asset management community. Cross-border asset owners and custodians are
simply among many indirect beneficiaries.
With nearly a quarter of the U.K. market’s survey share, BNP Paribas has
performed very strongly in 2014. Surpassing both the U.K. and global survey
average in every category, it can be confident in the fact that—relative to its
competitors—clients continue to regard it very highly indeed. BNP Paribas’
Tax Reclaims service stands out as being particularly well appreciated, rated
an entire 0.74 points above the U.K. average and 0.80 points above the
global average. Similarly, its impressive 6.22 in Relationship Management
exemplifies one client’s statement that, “through regular dialogue, I have a
clear understanding of the value I gain from this relationship.” Nevertheless,
internal standards have not been quite as well regarded as they were last
year. Despite dominating the market across the board, clients have registered
a sense of deterioration in service standards, awarding a total score 0.17
points lower than that awarded in 2013. Most notably, Reporting and
Settlement stand out as having regressed most significantly, with declines
of 0.41 and 0.39 points respectively. For Reporting, the bank’s “ability to
customize reporting to its client’s needs” has been rated relatively poorly by
a single client type. Regarding Settlement, BNP Paribas’ “ability to source
stock to avert trade failure” was marked even more harshly by the same
client type at a very disappointing 4.92.
BNP Paribas Securities Services
55 Moorgate
London
EC2R 6PA
Julien Kasparian
Tel +44 (0) 20 7410 1269
julien.kasparian@bnpparibas.com
Extracted from Global Custodian research data
17