By Adam Bateman & Johan De Bruyn, Investor Services, Standard Bank CIB
As pension fund portfolios grow more complex, the pressure on administrators to deliver accurate, timely reporting has intensified. Custodian banks are stepping up — not just as safekeepers, but as strategic partners in governance, compliance, and decision-making.
From Fragmentation to Clarity
Many funds still rely on asset manager reports for financial oversight. But with each manager using different systems and standards, inconsistencies are common. Reconciliation becomes manual, slow, and error-prone — especially for funds with multiple mandates across markets.
Custodian-led investment administration offers a cleaner alternative. Instead of aggregating third-party reports, custodians build the accounting record directly from custody data — including cash flows, valuations, and security identifiers. This creates a full, reconciled, double-entry accounting record that aligns with both custody and manager data.
“This model gives trustees a single source of truth — a golden record that supports audits, compliance, and performance tracking.” — Johan De Bruyn
The “Golden Record” Advantage
This independently constructed record underpins financial reporting, mandate compliance, and audit preparation. It helps funds catch discrepancies early and provides a reliable baseline for all downstream processes — from performance measurement to risk oversight.
For many, it feeds directly into the general ledger, streamlining year-end and reducing audit friction. For others, it serves as a vital check against internal or manager figures.
Scaling with Complexity
The value of this model grows with portfolio complexity. A fund with 15 managers is manageable; one with 85 mandates is not. Custodians that can report across asset classes and borders offer more than reporting — they offer meaningful operational relief.
South Africa’s Growing Adoption
Internationally, this model is well established. In South Africa, adoption is accelerating — especially as funds diversify into unlisted assets, private equity, and infrastructure under Regulation 28. Custodians are expanding services to meet these needs, offering tailored benchmarks, compliance rules, and reporting formats.
What This Means for Trustees
- Improved oversight: A centralised, reconciled record reduces risk and enhances transparency.
- Audit readiness: Cleaner data means fewer year-end delays and less friction with auditors.
- Regulation 28 alignment: Custodians help track alternative assets consistently — vital for compliance.
- Operational relief: Especially for large funds, this model reduces the burden on internal teams.
Custodian banks are no longer just safekeepers. For trustees, they’re becoming enablers of trust, clarity, and strategic control.
Sidebar: Regulation 28 & Alternative Assets
Why it matters: Regulation 28 of the Pension Funds Act governs how retirement funds allocate assets — including limits on equities, property, and alternatives like private equity and infrastructure.
Custodian relevance: As funds diversify, tracking and reporting these assets becomes more complex. Custodians offer standardised yet customisable tools to help trustees stay compliant and informed.
Key takeaway: Custodian-led administration supports Regulation 28 by ensuring consistent data, tailored benchmarks, and clear reporting — especially for unlisted and cross-border assets.
Adam Bateman
Business Development Head Strategic Partnerships Investor Services
Johan De Bruyn
Fund Services Head Investor Services at Standard Bank CIB
