Poland’s Custody Services: A Long-Term Banking Partner

Since the re-establishment of the Warsaw Stock Exchange (WSE) in 1991, Poland's capital market has experienced remarkable expansion, with market capitalization soaring from PLN 161 million to over PLN 2.2 trillion. This significant growth has concurrently fostered the development of sophisticated custody services and local depository banks. These entities have become indispensable partners for global custodians, foreign investment banks, pension funds, and insurance companies navigating the complexities of the Polish financial landscape.

The Evolving Landscape of Custody Services

Modern custodianships extend far beyond the traditional roles of clearing and settling transactions. Today, custodians are expected to operate as strategic, long-term partners, consistently delivering high-quality services, proactively anticipating client needs, and collaboratively developing bespoke solutions. This evolution is particularly pertinent given the increasing burden of regulatory requirements and escalating operating costs. These factors are fundamentally reshaping the industry, leading to shrinking margins and limited diversification opportunities. Consequently, many banks in Central and Eastern Europe (CEE), including Poland, have been compelled to withdraw from the custody business over the past decade due to a lack of economies of scale. This market consolidation underscores an urgent demand for reliable partners with a clear, enduring vision in the custody sector.

Technological Advancement: A Strategic Imperative

Sustaining robust custody services necessitates continuous and substantial investment in specialized systems. Crucially, these investments must be aligned with and effectively leverage the broader IT initiatives of the parent banking institution. To maintain a competitive edge, custodians must strategically integrate their technology roadmaps with the bank's overarching strategy to maximize value and minimize redundant expenditures. A prime example of this synergy in Poland is the upgrade of Sorbnet, the nation's Real-Time Gross Settlement (RTGS) cash system, to ISO20022 standards. This upgrade has significantly enhanced the cash leg of Poland's settlement cycle, improving efficiency and transparency. Furthermore, advanced technological tools such as Optical Character Recognition (OCR) for digitalizing document workflows, sophisticated connectivity solutions for data exchange, and machine learning algorithms for streamlining client inquiries are vital for enhancing and optimizing operational processes. Such initiatives exemplify how leveraging bank-wide technological projects can substantially strengthen custody services, driving efficiency and service quality without incurring duplicative costs.

National Champions vs. Global Players

Global clients frequently face a critical decision: whether to partner with an international custodian offering broad regional coverage or to opt for a robust domestic bank operating as a 'national champion'. While global players undoubtedly benefit from extensive international networks, their localized presence and depth of engagement often remain limited. In contrast, local champions, such as Bank Pekao in Poland, distinguish themselves through formidable balance sheets, superior liquidity positions, and an unwavering commitment to the domestic economy. These institutions possess an intricate understanding of local market dynamics and regulatory frameworks, which allows them to offer a more tailored and deeply integrated service.

The Strength of Local Expertise

National champions are instrumental in financing leading enterprises across diverse industries and actively supporting strategically significant domestic projects. Their provision of post-trade services to a broad spectrum of domestic financial institutions, including insurers and fund managers, generates the critical mass necessary for continuous investment and optimized resource allocation. Successful offerings to domestic pension and mutual funds are often predicated on the ability to accommodate highly bespoke requirements, reflecting the unique demands of the local market. For assets held in foreign markets, efficient and high-quality international standard services necessitate that a local champion carefully selects optimal sub-custody services abroad. Moreover, the growth of these foreign assets can often be strategically factored into mutually beneficial long-term partnerships.

Combining proactive sub-custody network management across numerous international markets, effectively meeting the diverse requirements of both domestic and foreign clients, and consistently sustaining bespoke solutions as a key differentiator represents a complex yet tremendously opportune endeavor. These practices demand agile and intelligent solutions to maintain operational efficiency, yet they simultaneously unlock significant value. Such capabilities can be leveraged across various client segments, fundamentally shaping the service offering from comprehensive market intelligence and powerful lobbying capabilities to advanced connectivity solutions and stringent Service Level Agreements (SLAs). The unique market positioning and compelling value proposition of local champions render them highly reliable partners for sustained long-term growth, presenting a viable and often superior alternative to local affiliates of global financial players.

Bank Pekao: A Testament to Enduring Partnership

Bank Pekao’s legacy as a prominent custodian traces back to the very re-establishment of the Warsaw Stock Exchange in 1991. The bank has grown organically alongside Poland’s burgeoning capital market, with its deep expertise and unwavering dedication playing an instrumental role in the market’s progressive development. Throughout this journey, Bank Pekao has successfully navigated the significant leaps required to align with the standards and sophistication of mature global financial markets.

Today, Bank Pekao stands as Poland’s second-largest universal bank and a recognized leader in the custody sector. The bank proudly serves a diverse client base that includes global custodians and international broker-dealers, notably providing essential clearing services for the WSE’s remote members. Furthermore, it has significantly expanded its role as a local depository bank, offering crucial support to both pension and investment funds. The bank’s ongoing commitment to technological advancement is evident in its continuous IT developments, which span from meticulously maintaining robust cybersecurity resilience to actively fostering the development of data-driven and Distributed Ledger Technology (DLT)-based services tailored for its clients. Bank Pekao’s diversified business model, complemented by an exceptionally experienced custody team and a balance sheet unrivaled in its strength and liquidity within the Polish market, constitutes a formidable set of competitive advantages that no other Polish custodian can currently claim.

Bank Pekao profoundly values the trust placed in it by its long-standing clients and is resolutely dedicated to providing unwavering support for many years to come, solidifying its position as Poland’s enduring partner for custody services.