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Custodian bank, or simply custodian, is a specialized financial institution responsible for safeguarding a firm's or individual's financial assets and is not engaged in "traditional" commercial or consumer/retail banking such as mortgage or personal lending, branch banking, personal accounts, automated teller machines (ATMs) and so forth. The role of a custodian in such a case would be to:

  • hold in safekeeping assets/securities such as stocks, bonds, commoditiessuch as precious metals and currency (cash), domestic and foreign
  • arrange settlementof any purchases and sales and deliveries in/out of such securities and currency
  • collect information on and income from such assets (dividendsin the case of stocks/equities and coupons (interest payments) in the case of bonds) and administer related tax withholding documents and foreign tax reclamation
  • administer voluntary and involuntary corporate actionson securities held such as stock dividends, stock splits, business combinations (mergers), tender offers, bond calls, etc.
  • provide information on the securities and their issuers such as annual general meetings and related proxies
  • maintain currency/cash bank accounts, effect deposits and withdrawals and manage other cash transactions
  • perform foreign exchangetransactions
  • often perform additional services for particular clients such as mutual funds; examples include fund accounting, administration, legal, compliance and tax support services
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