JPMorgan to outsource custody operations in HK, Taiwan

HONG KONG, CHINA — JPMorgan Chase is outsourcing its Hong Kong and Taiwan custody operations to another bank by the end of 2024, according to Reuters.

Citing two sources, Reuters reported that Citigroup, HSBC, and Standard Chartered are frontrunners in taking over JPMorgan’s custody clients in the two markets. While financial terms remain undisclosed, the transition aims to conclude in just over a year.

Custody operations involve safeguarding clients’ assets and handling transactions. JPMorgan currently oversees $520 billion in client assets under custody in those two Asian markets.

However, the bank is exiting this business in Asia because profit margins have declined amid slowing revenue growth and asset declines. Managing regional transactions and bookkeeping is less lucrative than JPMorgan’s global cross-border custody services.

JPMorgan has been similarly withdrawing from local custody operations in other Asia Pacific markets, like Australia, to focus more on higher-growth and higher-margin segments of its business.

This move aligns with shifts in global capital flows due to economic uncertainties and geopolitical tensions. Investment outflows from China are also accelerating amid US-Sino strains and slower mainland growth.