The choice of custodian bank is a structuring decision for any significant estate. It determines not only the security of your assets, but also market access, service quality, custody costs and operational flexibility. For families managing a complex portfolio, the question is not 'which bank?' but 'which banks, for which assets and why?'
The role of the custodian bank
The custodian bank holds your securities and cash, executes your market orders and maintains the accounting of your positions. It is distinct from the asset manager — who makes investment decisions — even though some banks offer both services under the same roof. This distinction matters: a family office may recommend separating custody from management, or even engaging multiple custodians.
Key selection criteria
Financial strength and credit rating
The first question concerns the solidity of the institution. In Switzerland, systemic banks have a particular status, but this does not mean that every Swiss bank presents the same risk profile. The credit rating of the parent institution, its core equity tier 1 (CET1) ratio and its FINMA classification are indicators worth consulting.
Access to markets and products
Certain banks offer superior access to specific markets (primary bond markets, alternative investments, institutional funds). If your allocation strategy includes illiquid assets or niche markets, the choice of custodian must take this into account.
Fee structure
Custody fees, transaction costs, foreign exchange fees and custody charges vary significantly from one institution to another and according to volumes. A rigorous comparative analysis is essential, all the more so as fees are often presented in a non-transparent manner. A family office can conduct this analysis and negotiate terms on behalf of its clients.
Service quality and reporting
The quality of account statements, the responsiveness of teams, reporting tools and the ability to produce data in the format required by your consolidation system are important operational criteria.
International presence
For families with assets or beneficiaries in several countries, the bank's international presence, its correspondent network and its command of local regulations may be decisive.
Ridger
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The esisuisse deposit guarantee
In Switzerland, bank deposits are protected by the esisuisse guarantee scheme up to CHF 100,000 per client per bank. This ceiling applies to account deposits (current, savings, deposit accounts) but not to securities: transferable securities (shares, bonds, funds) are the property of the client and do not form part of the bank's insolvency estate — they are segregated and protected independently of the esisuisse ceiling.
For significant cash balances, it is therefore advisable to spread them across several institutions so as not to exceed the guaranteed threshold. For securities portfolios, the statutory segregation already provides significant protection.
Diversification: how many banks?
There is no universal answer, but market practice suggests that two to three custodian banks often represent a reasonable balance for a medium-sized portfolio. Below this number, concentration risk is real. Beyond it, operational complexity and fixed costs (minimum fees per institution) can erode net performance.
Diversification should be driven by substantive reasons:
- access to differentiated expertise or products
- distribution of counterparty risk
- fee optimisation per institution
- separation of family and professional assets
A strategic, not an administrative, decision
The choice of custodian banks is not an administrative exercise. It is a strategic decision that merits rigorous analysis and regular review. Market conditions, institutional soundness and family needs evolve, and the composition of the banking panel should evolve accordingly.
Ridger assists its clients in selecting, tendering and monitoring their custodian banks. To discuss this in full confidence, we invite you to contact our team.