BNP, State Street vying to snap up BBVA's custody business –sources

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France's BNP Paribas and U.S. firm State Street Corp are vying to buy the custody business of Spanish lender BBVA and have made indicative bids for the unit as they battle to build scale, three sources told Reuters.

Madrid-based Cecabank has also come forward with an offer, one of the sources said, cautioning it may struggle to compete with larger international players.Banks' custodian services departments look after assets for clients in return for fees. But custody is a low-margin business and growing competition is making scale important, raising pressure on banks to carve out and sell their operations.

"You need to generate heavy volumes for these operations to make sense as margins are low," one of the sources said.custodian unit which had 22 billion euros in assets under depositary. The French lender is one of Europe's main players in custody and has been working on an offer for the BBVA unit for several months, one of the sources said.

BBVA has almost 80 billion euros under administration across its entire custody business which includes investment funds, pension funds and open-ended collective funds known as SICAV.which combined its custody and asset servicing operations with those of Credit Agricole in 2019 and retained only 30.5% of the merged entity.

 

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