Who is a Custodian Bank and How They Run the Business? A custodian bank is a specialized financial institution responsible for the safekeeping and administration of financial assets on behalf of clients like mutual funds, pension funds, insurance companies, and hedge funds. Unlike commercial banks, custodian banks don’t lend money or deal with individual customers. Their core function is to protect client assets and manage post-trade activities. How They Run Their Business: Custodian banks generate revenue by offering value-added services and charging fees. They operate through direct custody in major markets and sub-custodian networks in emerging ones. They ensure asset safety, trade settlement, and regulatory compliance. Example – Citigroup (Citi) Custodian Business Citi Securities Services provides custody in over 60 markets and handles more than $27 trillion in assets. Direct custody in major countries ...
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