China takes another big step to open its financial markets
Posted October 29, 2018 7:50 a.m. EDT
(CNN) — A foreign bank has been given access to a key piece of China's financial system for the first time.
Standard Chartered (SCBFF) said Monday that it is the first foreign lender to receive permission to hold and safeguard the assets of local investors in China.
The license granted by the China Securities Regulatory Commission allows the bank to act as a custodian for investment products sold by both international and local asset managers and funds.
Standard Chartered is based in London but focuses on emerging markets. Its shares jumped nearly 2%.
"This is a big step forward in the further opening up of China's domestic financial markets and a testament to our commitment to supporting China's financial reform and innovation," Jerry Zhang, CEO of Standard Chartered in China, said in a statement.
Acting as a custodian can be a big business. One of the leading global players, JPMorgan Chase, had assets worth more than $23 trillion under management in 2017, generating $3.9 billion in revenue for its securities services business.
Big Western banks have been trying to break into China for years, but their progress had been slowed by restrictions on their activities and rules that limited them to minority ownership of ventures in the country.
Only HSBC (HSBC) has a significant presence through its 19% stake in China's Bank of Communications.
This year, China has accelerated reforms aimed at giving foreign banks greater access to the country's massive financial markets and wealthy investors.
The government pledged last November to allow foreign companies to own Chinese banks and investment firms. UBS (UBS) took the plunge in May, saying it would seek control of its joint venture in China by upping its stake in the business to 51%.
Nomura (NMR) and JPMorgan Chase (JPM) have also sought permission to launch majority-owned brokerages in China after the government relaxed its rules.