NAB Asset Management's days as the top dog in the Australian custodial market look to be numbered, with the firm having lost 16.8 per cent of its market share in the last six months of 2015.
JP Morgan increased its total assets under custody (AUC) for Australian investors to $573.19 billion by 31 December 2015, close behind NAB Asset Servicing, which sat at $584 billion as at the end of 2015.
Of the 12 top custodians ranked in the Australian Custodial Services Association's (ACSA's) twice-yearly report, NAB Asset Servicing was the only player to see its AUC fall during the last six months of 2015.
NAB Asset Servicing had $702 billion in AUC as at 30 June 2015, meaning the firm saw a drop of 16.8 per cent to $584 billion by 31 December 2015.
While JP Morgan saw its AUC increase by 2.8 per cent during the period, the biggest beneficiaries of NAB's decline were Northern Trust, State Street and BNP Paribas Securities Services (with increases of 28 per cent, 27.7 per cent and 24.9 per cent respectively).
As at 31 December 2015, BNP Paribas was the third largest player in the Australian custody business with $429.8 billion in AUC.
Overall, the Australian custodial and administration sector grew by 4.9 per cent in the second half of 2015, with total AUC for Australian investors now at $2.92 trillion according to ACSA.
Of that amount, $1.99 trillion represents Australian assets, with the remaining $926 billion in foreign assets having increased by 8.6 per cent in the last six months of 2015.
ACSA chair David Knights said that as the Australian superannuation sector grows and markets need to absorb more capital, fund trustees are looking overseas to remain well diversified.
"While local investors are growing offshore allocations, it runs both ways, with foreign investors looking to Australia for its unique investment profile," he said.
"The result is that custodians are working in an increasingly globalised sector and need a broad set of skills and knowledge to do so successfully," Mr Knights said.
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