What is a custodian bank?

Learn what a custodian bank is.


A custodian bank is a financial institution that is responsible for the safekeeping of assets, including stocks and shares. They are often known simply as ‘custodians.’

Keeping someone’s stocks safe may sound straightforward but it comes with a whole host of responsibilities.

Custodians will usually be responsible for handling all the bureaucracy that comes with buying and selling stocks. That includes any tax issues, dividend payments or foreign exchange transactions that need to be carried out.

It’s worth noting that a custodian is largely concerned with the mechanics of investing. So if you store cash with a custodian, it’s not like holding a regular bank account that would let you go to an ATM and withdraw money.

In fact, custodial services are distinct from regular banking services. Though there are banks that offer a range of services, their custodial operations will be separate from any consumer or commercial banking services, such as lending or operating bank branches.

‍

More terms

Net asset value

Mutual funds and investment trusts are priced on their net asset value (NAV).
Read more

Coupon

Also called a dividend, this is the fixed annual interest paid to gilt holders. It’s usually paid in two equal, semi-annual instalments and expressed as a percentage of the nominal value of the gilt.
Read more

Inflation

The increase in the prices of goods and services over time, and the process by which money loses its value.
Read more

Bull market

We explain what a 'bull market' means
Read more

Fundamentals

The data or information that is likely to impact a company's stock price.
Read more

Stock Market

A place where shares of publicly listed companies are traded.
Read more

Equity

The amount of money a company would be left with by subtracting its liabilities from the value of its assets.
Read more

Securities

Bonds and stocks.
Read more

Global Investment Performance Standards (GIPS)

A set of standards which investors use to present their investment results.
Read more

You're just minutes away from commission-free investing

Capital at risk. Other charges may apply.