ICBC continues to head the custodian bank ranking for China by securing RMB 2.8 trillion of assets under custody by the end of December 2010, representing an increase of RMB 800 billion from the first half 2010. ICBC started the custodian services in 1998. Since then, on the back of the robust growth of China's capital market, the scale of assets under ICBC custody rose from RMB 6 billion in 1998 at an annual average compound growth rate of over 80% in the past 12 years.
ICBC dutifully performs its custodian role while gathering speed on the business. ICBC wins the applause from the market and investors for its steady, safe and highly efficient performance in custodian services by achieving zero-error processing.
The strong momentum of ICBC's custodian business over the years underscores the value of ICBC focus on innovation to drive sustainable growth of the business besides driven by the fast development of China's capital market, said the general manager Zhou Yueqiu of ICBC Asset Custody Department. Starting from 1998, ICBC was the pioneer in the country to launch custodian services for many innovative fund products such as close-end funds, open-end funds, index funds, bond funds, capital guaranteed funds, money market funds, LOF, ETF, clone funds and rating funds.
ICBC is the first bank in China to bring full-procedural, full-amount custodian services for insurance assets, one of the custodian banks in the first batch for QFII and QDII, corporate annuity funds and asset securitization products. ICBC maintains a policy to keep pace with innovation in the market to serve the needs of customers to the greatest extent and advance the growth of its custodian business at the same time.
Zhou Yueqiu said, custodian service for securities investment funds remains a strong custody business of ICBC. The business has been proceeded at an impressive pace despite fluctuation in domestic securities market due to many factors. By the end of December 2010, ICBC topped the league table by adding nearly 50 securities investment funds under custody over the end of previous year and continued to stay ahead of the pack by having nearly 190 funds under custody and capturing nearly 30% market shares in terms of the net-worth of assets under custody.
Besides, ICBC retains its place at the top of Chinese banks by providing custodian services to 17 QFII customers and scoring over 30% market shares in QDII custodian services. ICBC remains the bank to beat in offering custodian services for corporate annuity funds and trust asset plan, management and custodian services of assets for special customers (fund houses), and custody of bank wealth management products.
A large driver of the balanced growth in ICBC's custodian business has been the Bank's focus on the growth strategy by concentrating on the over-the-market and emerging custodian services such as Anxin A/C, bank wealth management products, asset management plan for brokers. The well balanced asset custody profile adds strength to ICBC's innovation and increases its product offering, and a good beginning of running traditional and emerging businesses in parallel.
ICBC's custodian service network is extending from Head Office to all branches nationwide, from local custody to global custody while maintaining rapid and balanced growth of the business. Starting from 2003, ICBC allowed in phases the opening of custodian services by domestic branches with the right conditions through authorization.
At present, the domestic network for custodian services is basically in place with all domestic branches (except Tibet Branch) opening custodian services under the authorization from Head Office. At the same time ICBC set its sight on global custodian services by spending efforts to build a global network.
In the last few years, ICBC lent support to ICBC Asia, ICBC London to open custodian services and foster close ties with many well-known global custodian banks. ICBC set for global advance in light of further cooperation with the overseas custodian agents and stronger capabilities of ICBC overseas subsidiaries in this business area.
As Zhou Yueqiu related, the initial purpose of custodian system is to protect the interest of the principal, which remains the top priority in ICBC's agenda of advancing the business. Risk management and business development gain equal weight. A complete mechanism via which internal risk can be controlled has been set up.
For the past 12 years since the launch of the business, ICBC maintained a very good record in asset valuation, accounting and auditing, fund clearing and securities settlement. In 2005, ICBC is the first custodian bank in China to launch SAS70 program and certified with SAS70 accreditation. ICBC started annual SAS70 audit on custodian services beginning from 2008 and received SAS70 report with unqualified opinions on the controls and validity.
In order to better perform the duties of a custodian and ensure the normal operation of custodian services during sudden events or disasters, beginning from 2007 ICBC was the first custodian bank in China to stage disaster recovery drill. In December 2009, ICBC completed the first disaster recovery random drill in China, reaching the international standard of recovering all business processing 2 hours after disaster.
