If SocGen sells Securities Services, who benefits?

Reuters reports that SocGen expects to sell assets in its asset management and specialized financial services divisions – ie, Securities Services – in order to raise 4 billion Euro to shore up its balance sheet.

If SocGen were to sell off its lower top-10 custodian, the division would likely be bought by an immediate competitor in the custody space:

BNY Mellon and State Street come to mind, both of whom are working to expand their European franchises and have made recent acquisitions. Meanwhile, BNP Paribas, JPMorgan, HSBC, RBC Dexia and a few others are all competing for the right to be one of the last big custodians standing.

A major implication for securities finance in Europe is that whoever buys the division could see a new range of potentially captive clients for securities lending and collateral management services. Finadium research suggests that many of SocGen’s custody clients use the firm’s internal services; for example, there are not a lot of third party lending agents in SocGen’s custody client mix.

The sale of SocGen’s large business platform and client base could emerge as a key defining moment in the custody business, one where an existing large player cements its lead or a smaller player aims to double its market share. Crises make for good opportunities; a hurried sale of SocGen’s Securities Services division would be one of them.

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