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

Packaged Retail and Insurance-based Investment Product (PRIIP)

An investment where, regardless of its legal form, the amount repayable to the retail investor is subject to fluctuations.
Read more

Annualised Rate of Return

The average annual return an investor sees over a set period of time.
Read more

Bond

Learn what a bond is
Read more

Custodian bank

Learn what a custodian bank is.
Read more

Time-Weighted Rate of Return (TWRR)

A return calculated over the time period invested, that excludes extraneous elements, such as deposits to and withdrawals from the investment accounted.
Read more

Conventional gilts

Gilts where the dividends and principal repayments are fixed in nominal terms. This is as opposed to an index-linked gilt where the dividends and principal repayments are related to movements in the Retail Prices Index (RPI).
Read more

Venture Capital

A type of financing that investors provide to startups, who sometimes announce getting said financing in TechCrunch, to big fanfare.
Read more

Bookbuilding

How banks work out what investors will pay for shares before an IPO, one order at a time.
Read more

Running yield

The annual interest payment (dividend) divided by the current market price of a bond.
Read more

You're just minutes away from commission-free investing

Capital at risk. Other charges may apply.