The German market has held up well over the last 12 months with clients continuing to place importance on regional expertise, says Robert Scott, head of custody and collateral solutions at Commerzbank.

“Custody of assets is increasing at both the service providers and the CSD. Germany continues to play a significant role in the context of eurozone. For clients, it represents a relatively safe haven for their assets and Germany therefore still benefits from strong capital inflows. Additionally, for German custodians incorporated in the country, clients have significant comfort that their assets are protected under federal law (Depotgesetz) in the event of insolvency or stressed situations.”

Legal requirements have been further clarified and amended with the entry into force of regulatory requirements as Ucits V, the AIFM directive and the German Capital Investment Legislation (KAGB). Almost all contracts and service level agreements (as well as processes and documentation) had to be adapted to ensure compliance with the last of these regulations, explains KAS Bank Germany managing director Frank Vogel.

The legal requirements of KAGB, the level 2 regulation related to the AIFM directive and some preliminary decisions under the previous interpretations of the law require an update of the previous custodian circular BaFin 6/2010 (WA). BaFin has published a working document and discussions are ongoing through sessions of the local working group, which includes representatives of custodian banks.