Standard Chartered’s agreement to buy all of Zodia Custody is really two transactions. It splits a digital asset business into the part a bank wants on its own books and the part it wants others to fund.
On 21 October the bank said Standard Chartered I H Limited had signed definitive agreements to acquire 100% of Zodia Custody Limited, after its earlier non-binding offer was accepted. Zodia Custody Limited is the parent of regulated operating entities in Singapore, Hong Kong, Australia, the UAE and Luxembourg. Once the deal completes, that regulated custody business joins Standard Chartered’s existing digital asset custody activity within Securities Services, where the bank expects revenue synergies.
The rest of Zodia, its software and professional services arm, goes to Zodia Solutions, a new independent entity under SC Ventures. Its listed backers are NAB Ventures, Northern Trust, SBI Ventures, Further Ventures, Emirates NBD, Investcorp and Zodia Holdings Limited, owned by SC Ventures.
The split shows where the bank thinks the value is. Custody brings recurring fees, depends on client trust and needs regulatory licences. Standard Chartered is bringing that into its securities services franchise. The technology needs ongoing investment and, to grow, other banks as customers. Those other banks are less likely to buy from a competitor’s own division than from an independent company. Several of them are now shareholders in that company.
The release discloses no price and names no sellers. Completion depends on regulatory approvals and customary conditions, with no timetable given. The bank says existing clients will see no disruption.
The quotes support this reading. Ying Ying Tan, Global Head of Securities Services and Digital Assets at Standard Chartered, said: “This is in line with our commitment to provide our clients with access to institutional-grade custody supported by the depth, breadth and global connectivity of an international cross-border bank.” Richard Clark, Chief Executive Officer of Zodia Custody, said: “As institutional adoption of digital assets accelerates, custody is increasingly becoming part of the global banking landscape.” Craig Perrin, Chief Executive Officer of Zodia Solutions, said: “Financial institutions are moving beyond digital asset pilots towards operating services at scale.”
Digital Trade Outlook’s View: Custody Comes Home
Standard Chartered takes the fee income and the client relationships, and moves the technology build to a company funded by other banks. Clients get custody from a bank group instead of a specialist. Independent custodians lose part of their pitch. Other banks now choose between building their own custody and buying it from Zodia Solutions.
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Image: Standard Chartered and Zodia Custody logos