What Is a Custodian Bank?

A custodian bank is a type of bank that works hand-in-hand with a financial brokerage or investment company. The custodian bank is in charge of keeping the securities and other investments that are made by the investment company or brokerage. 

When an individual works with an investment company to buy stocks or bonds, there needs to be a safe place to keep these securities. The investment company will pass these securities onto the custodian bank to retain them while their customers own them.

The custodian bank also has to be able to quickly transfer the assets when they are sold by the investors. This requires the custodian bank to be extremely efficient and well-versed in the finance industry.

Many custodian banks operate in multiple global markets. They have to have locations around the world so that they can accommodate the many customers that they service.

In some cases, custodian banks will also be in charge of taking care of physical property, such as jewelry or other collectibles, for clients. They typically work with investment companies, but they can also work with individual investors.

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