Custodial banks are trying to make up for lost time and billions in lost fees from hedge funds as they jockey for a share of the business Wall Street giants have been enjoying. Bloomberg News reports that although custodial banks, such as the Bank of New York, State Street, Mellon Financial and Northern Trust, would be a natural fit for hedge funds, they may have missed the boat by focusing on mutual funds and pensions plans over the past half-dozen years, while hedge funds were doubling their assets. The custodian banks just didnt adapt, Finance Professor Steven Mann of the University of SouthCarolinas Moore School of Business told Bloomberg. Theyre hoping to change that now by introducing more hedge funds to their record-keeping services. The banks may still lose out to the likes of Goldman Sachs, however, because their own policies prevent them from offering the service that reaps the Wall Street firms the huge fees namely lending securities. Last year, Wall Street firms shared $5.5 billion in fees for lending stock; in contrast custodian banks took in under $1 billion for its administrative services.