The Spanish depositary sector has been undergoing a concentration process since 2008, driven by two trends. On the one hand, the asset management industry and market infrastructures increasingly require greater specialisation and investment in technology. This digital innovation, in addition to seeking greater operational efficiency, also aims to 'continue innovating in the services and products made available to our customers, improving processes and circuits, with an impact on the stakeholder', explained Fernando García Rojo, head of Sales and Customer Relations at BBVA Global Securities Services. This digitalisation, which requires significant investment, has encouraged the concentration of depositary activity in the hands of a few institutions.
The second driver of concentration is the tendency of financial groups that traditionally pool management, distribution and depositary activities for savings and investment vehicles to stop providing depositary services and to outsource this activity to depositaries outside the group in order to focus on their core businesses. This has also been the case internationally.
This evolution, coupled with competition among depositaries to capture the business of a larger number of institutions, has had different consequences for savers and investors. As explained by Aurora Cuadros, Corporate Director of Securities Services at Cecabank, the main effects have been "the consistent drop in average depositary fees and an improvement in the quality of the services provided by the depositaries as a result of the high level of specialisation and the technological innovations implemented".
The CNMV estimates that depositary fees have fallen by 36% since 2008, to 0.07%. Will this downward trend continue? Opinions vary. Nuria Alonso, Product Manager at Securities Services BNP Paribas, believes that 'this trend of price containment will continue and could even be more pronounced in order to offer the most competitive service possible'. However, the expert warns that even in this environment of higher costs and the impossibility of raising prices, 'the quality of the service must be guaranteed; our ultimate goal is to protect investors' interests', she added.
New legal obligations are among the pressures faced by the industry. 'We face a very challenging sector in terms of regulation. It is also very dynamic and sensitive to price fluctuations', commented Óscar Pino, Head of Depositary Services at Inversis. However, 'the role of the depositary is focused on providing the service in accordance with the regulations, seeking at all times the optimal balance of quality service at a competitive price'.
Return
Meanwhile, Cristina Gómez, Head of Business Solutions at Caceis, believes that the declines may have stagnated: 'Depositary prices have bottomed out because it is important that we continue to be profitable institutions in order to undertake the investments needed, which go hand in hand with the eventual change in technological infrastructure and the adaptation to regulatory developments. This is what will guarantee a quality service and ensure that the sector does not become more concentrated', she assured.
In any case, what cannot be disputed is that, with this support and adaptation to the needs of the fund managers, the role of the depositary has been significantly enhanced in recent years. García Rojo, from BBVA, concluded: 'There has been a very significant evolution of the role of the fund bank to that of an entity that supports customers throughout their journey'.
This concentration, specialisation, the context of falling fees and the challenging regulatory and technological environment have not prevented the sector from continuing to grow. According to the Spanish Depositary Ranking prepared by FundsPeople, at the end of 2023 the figure stood at €512.074 billion, which represents a growth of 9.7% compared to 2022 (€466.862 billion). If we also add alternative assets, the volume rises to 543.23 billion.
The top-ranked institutions remain unchanged from last year. Cecabank, Caceis, BBVA and Securities Services BNP Paribas dominate the top of the table, far ahead of the rest. This Top 4 account for €475.9 billion, representing 87% of assets under deposit in Spain.
