We hear repeatedly that providing custody services efficiently is a challenging task. Now, the Danske Bank group gives up on doing it for its own investment arm Danske Invest, handing over the massive mandate instead to JP Morgan.
Danske Invest is the collective brand used by the Danske Bank group for its various investment fund entities. The total administered assets under it amounted to 750 billion DKK at end-2020 (120 billion USD). Custodied assets, amounting to a majority of the total, will be moved over to the custody of JP Morgan in the first quarter of 2022, Danske has announced in a Danish-language press release.
“In 2020, Danske Bank assessed its deliveries in the area of custody services and capital management for Danske Invest in Denmark. The conclusion was that the capital management services could be supplied in a more appropriate for the bank as well as for Danske Invest, if the bank stood back from delivering custody bank services,” Danske Invest writes.
Investment stays inhouse
The volume of assets to be taken into custody by JP Morgan is not quantified in the Danske Invest press release, but media including Global Custodian quote 70 billion USD.
Despite the asset move, Danske Invest says it will continue to use a number of administrative services provided by Danske Bank’s Investor Services. Danske Bank will also remain the advisor and distributor for the main part of Danske Invest’s funds.
Follows a trend
Custody operations is a scale game, where it can be hard even for regional leaders to compete with global ones. In the Nordics, we have recently observed how Nordea shut down, recommending its clients to go to Citi, and we have previously written about the effort SEB went through when setting up an operational partnership with BBH.
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