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Glossary

Custodian Bank

A Custodian Bank (also referred to simply as a custodian) is a financial institution that holds securities and other assets on behalf of clients, maintains accounts, settles transactions, and provides custody statements. It does not take investment decisions. Swiss custodian banks are subject to the Banking Act (BankG). In independent asset management, the manager and the custodian bank are legally separate companies. Client assets are held at one or more custodian banks. Under the Financial Institutions Act (FinIA), a wealth manager is anyone who, on the basis of a mandate, can dispose of clients' assets on a commercial basis in the name and on behalf of those clients (FinIA Art. 17). The mandate agreement governs what the manager may do in relation to the client. In dealings with the custodian bank, the power of attorney the client grants to the manager applies.

At a glance

  • A custodian bank holds assets but does not take investment decisions; custody and management are deliberately separate functions.
  • Swiss custodian banks are governed by the Banking Act (BankG), with strict requirements on capital, liquidity, and bookkeeping.
  • With an independent asset manager, the choice of custodian bank rests with the client. In dealings with the custodian bank, the power of attorney the client grants to the manager applies. This power of attorney sets out the extent of the manager's authority over the client's assets, for example regarding payments to third parties.
  • An asset manager can use several custodian banks simultaneously for one mandate, for example one for liquid and one for illiquid positions.

Frequently asked questions

The Custodian Bank holds assets, settles transactions, and maintains accounts, but does not decide on purchases or sales. The asset manager holds the mandate, develops the investment strategy, and implements it. Both roles are regulated separately, which structurally limits conflicts of interest.
Yes. With an independent asset manager, the choice of Custodian Bank rests with the client. The manager typically recommends suitable institutions but is not tied to its own custodian relationships. This strengthens independence and makes it possible to select a custodian based on criteria such as costs, product range, or domicile.

Part of the topic

Discretionary Mandates

This entry is for general information purposes only and does not constitute investment, legal or tax advice. It is a simplified summary of the legal position and tax treatment.