Discover insights into the evolving trends of Luxembourg's depositary banking sector with our latest survey. Driven by regulatory changes, market demand, and Luxembourg's position as a global financial hub, the sector has experienced significant transformation. To give you an in-depth understanding, the Luxembourg Bankers' Association (ABBL) and KPMG Luxembourg, in collaboration with Luxembourg's financial regulator CSSF, have launched its third national survey as well as providing valuable insights from these depositary banks long form reports submitted to the CSSF.
Depositary Banking & Custodian Services Survey participants
- 0banks
with reported balances were included in the depositary services survey.
- 0banks
were included in the custody services survey.
In addition to the data from the Depositary Banking & Custodian Services Survey, we analyzed insights on the Depositary sector extracted from the Descriptive undertakings for collective investment (UCI) Depositary section of the Long Form Report (LFR) submitted to the CSSF annually:
- 0banks
from ABBL Depositary Cluster that complete the UCI Depositary section.
Key takeaways
Overall growth of +7.44% driven by key entities and market dynamics
The trend shows a general improvement compared to 2022, driven by organic growth, acquisition of new clients and favorable market conditions. However, the growth is heavily concentrated, with 71% of the growth attributed to five entities.
The Assets under Depositary (AuD) composition showcases a dynamic surge in alternative funds, with Reserved Alternative Investment Funds (RAIFs) and other Alternative Investment Funds (AIFs) partnerships rapidly gaining momentum.
The AuD of Luxembourg-domiciled UCIs, for which the banks in scope act as the depositary, has risen by:
- €144 billion for RAIFs
- €180 billion for other AIF
- €57 billion for SICARs
However, UCITS maintains its dominance, accounting for 66% of the total AuD in 2023, equivalent to €4 trillion in AuD. Source: Depositary section of the LFR.
Total AuD, NAV value, in trillion EUR
Assets composition:
The survey includes the following UCIs and investment vehicles with depositary requirements.
UCIs/Investment vehicles types
- UCITS
- Part II of the 2010 Law
- SICAR
- SIF
- RAIF
- Unregulated company qualifying as AIF and having appointed a depositary
- ELTIFs
- Non-Luxembourg domiciled investmemt vehicles with depositary requirement as per article 36 of the AIFMD
Note: The values for 2022 have been adjusted to account for restatements and closed entities.
Increased focus on more complex asset classes
Compared to the past year, the AuD for equity funds and bond funds have steadily increased, maintaining dominance across all assets classes, where:
- €188 billion for bond funds
- €105 billion for mixed funds
However, non-standardized funds, such as private equity funds, are on the rise:
- €108 billion for private equity funds
- €229 billion for other funds, which includes movable property, infrastructure, syndicated loan, timber, cryptoassets.
The shift calls for a rapid increase in the optimization of operational workflows, resources allocation and digitalization, as these non-standardized funds currently heavily rely on manual processes from the depositary banking perspective.
Total AuD per asset classes in billion EUR
Equity fund
Bond fund
Mixed fund
Private equity fund
Other*
- 2022
- 2023
*e.g. movable property, infrastructure, syndicated loan, timber, cryptoasset etc.
Source: Extract from LFR 2023
5% growth in assets under custody
The positive trend is primarily driven by five entities, fueled by organic growth, the onboarding of new clients, and favorable market conditions. The overall growth is primarily associated with an increase in Assets under Custody (AuC) attributed to managed accounts, influenced by the onboarding of clients from two entities only.
Total AuC in trillion EUR
Assets composition:
The survey includes the cash and assets held in custody from the below client types:
| Client types |
|---|
| Managed accounts (including investment firms business) |
| Clearing or settlement institutions |
| Credit institutions |
| Pension funds |
| Other investment vehicles with no depositary requirement |
| Insurance companies |
| Commercial or industrial companies benefiting from professional access to the financial market or international public bodies operating in the financial sector |
The values for 2022 have been adjusted to account for restatements and closed entities.
Delegation of support activities outside Luxembourg persists
As the financial landscape evolves, the Depositary and Custody sector continues to thrive, marked by a steady increase in both Asset Under Custody and Asset Under Deposit. This growth showcases the sector's remarkable ability to adapt to increasing complexity and expansion, while successfully maintaining a balanced 1:1 ratio of local to international staff.
This balance allows for local expertise to tackle the intricacies of the alternative investment funds sector and other assets, while also utilizing personnel outside of Luxembourg in operational centers to support the global functions of depositary banking and custodian services.
For a deeper dive into the evolving landscape of Luxembourg's depositary banking sector, explore the full findings of our survey. A must-read for industry professionals!
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