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One size fits some: analysing profitability, capital and liquidity constraints of custodian banks through the lens of the SREP methodology

Author

Listed:
  • Coste, Charles-Enguerrand
  • Tcheng, Céline
  • Vansieleghem, Ingmar

Abstract

Custodians play a key but discrete role in the global financial market infrastructure. In Europe, they are licensed as “credit institutions ”, a legal requirement for European deposit-taking institutions, and therefore they face the same prudential requirements as “traditional” banks. However, their business model and risk profile are different from those of traditional banks since the core of their activity does not encompass balance sheet transformation and the associated risks. JEL Classification: G15, G21, G28, L22

Suggested Citation

  • Coste, Charles-Enguerrand & Tcheng, Céline & Vansieleghem, Ingmar, 2021. "One size fits some: analysing profitability, capital and liquidity constraints of custodian banks through the lens of the SREP methodology," Occasional Paper Series 256, European Central Bank.
    • Handle: RePEc:ecb:ecbops:2021256
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    File URL: https://www.ecb.europa.eu//pub/pdf/scpops/ecb.op256~3e9f3e8b43.en.pdf
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    References listed on IDEAS

    as
    1. Robert Cox & Robert Steigerwald, 2017. "A CCP Is a CCP Is a CCP," Policy Discussion Paper Series 93561, Federal Reserve Bank of Chicago.
    2. Diana Chan & Florence Fontan & Simonetta Rosati & Daniela Russo, 2007. "The securities custody industry," Occasional Paper Series 68, European Central Bank.
    3. Benjamin Munyan, 2015. "Regulatory Arbitrage in the Repo Market," Working Papers 15-22, Office of Financial Research, US Department of the Treasury.
    4. Russo, Daniela & Rosati, Simonetta & Chan, Diana & Fontan, Florence, 2007. "The securities custody industry," Occasional Paper Series 68, European Central Bank.
    Full references (including those not matched with items on IDEAS)

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    Cited by:

    1. George Pantelopoulos, 2024. "Can external sustainability be decoupled from the NIIP?," International Economics and Economic Policy, Springer, vol. 21(1), pages 89-116, February.

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    More about this item

    Keywords

    bank; credit institution; custodian; prudential supervision;
    All these keywords.

    JEL classification:

    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure

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