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Asset Custody Business


 

In July 1998, approved by the China Securities Regulatory Commission (CSRC [1998] No 24.) and People's Bank of China, Bank of China became the first five banks engaging in fund custody business. In October of the same year, Bank of China set up Fund Custody Department in head office and custody branches in Shanghai and Shenzhen. Fund Custody Department is the professional functional department of Bank of China for custody business market research, product development, marketing, business operations, customer service and management within its jurisdiction. With the continued expansion of business scope and range of services, in early 2005, Bank of China took listing as an opportunity, restructed the organization structure, business process and management process of custody business, and renamed Fund Custody Department as "Custody and Investors Service Department", which further reflected the customer-centric business philosophy.

In accordance with the "appropriate separation of frontline, midline and afterline" principle, Bank of China Custody and Investors Service Department set up many teams covering sales, marketing, operations, compliance, information technology, administrative management, equipped with abundant numbers of qualified personnel, having more than 100 employees. Bank of China Custody and Investors Service Department has a high quality custody team, most of the staff having rich experience in banking, securities and fund working, and having overseas working, studying or training experience, more than 60% of employees with master's degrees or senior professional titles. Members of General Manager's Office, responsible persons for major business teams and senior management personnel have long been engaged in financial work overseas for many years, familiar with the operation of market at home and abroad.

Bank of China has the most complete custody customer base and custody product lines, not only has the National Council for Social Security Fund, the China Development Bank, Industrial and Commercial Bank of China, China Life Insurance Company Limited, PICC, American International Assurance Company, the Social Security Fund of Jilin Province, Masteel Group, Huaibei Mining Group, Fortis Haitong Investment Management, E Fund Management Corporation Limited, Harvest Fund, Huaxia Fund and other most heavyweight custody customers in domestic custody sub-market, also has Belgian Fortis, American International Group, American Invesco Group, Scotiabank, Standard Chartered Bank, Japan Dai-ichi Mutual Life Insurance Group and other custody customers of international financial institutions. For custody products, the custody products category of Bank of China has extended from the initial securities investment fund custody to Social Security Fund, insurance fund, qualified foreign institutional investor(QFII) domestic securities investment fund, qualified domestic institutional investor(QDII)foreign investment fund, corporate annuity, investment linked insurance products, trust fund, Stock Broker Wealth Management Plan fund, asset-backed securities fund, industrial investment fund and other fund custody business of institutional clients, covering fund, social security, insurance, QFII, QDII, trust, securities, industrial and other fields. Bank of China is the largest Chinese-funded custodian bank, with global custody assets exceeding trillion Yuan, and the largest institutional client asset custody bank.

Bank of China always attaches importance to custody business and service innovation. It has set up dedicated R & D Department since the inception of Fund Custody Department, and fully guaranteed that Bank of China has become the first or the first batch of custodian banks in almost all of the custody areas, such as the securities investment funds, Social Security Fund, corporate annuity, insurance funds, QFII Domestic Investment Fund, Stock Broker Wealth Management Plan fund, asset-backed securities funds, QDII (qualified domestic institutional investors) foreign investment, etc. In the first testing period, Bank of China is also actively involved in research subjects of various regulatory institutions and organizations, fully contributing its experience and wisdom to promote the establishment and improvement of industry standards.

In recent years, with our customers' trust and support, through continuous innovation and improvement of customer service, each custody business of Bank of China has been rapidly developing. In security investment funds and Stock Broker Wealth Management Plan custody, Bank of China is currently responsible for nearly 60 funds and wealth management plans under the management of nearly more than 20 fund management companies and securities firms, ranking forefront in the industry. Its entrusted funds include all major fund types such as Equity Fund, Bond Fund, Balance Fund and monetary market fund, as well as Capital Protection Fund, listed open-end funds(LOF), Exchange Trading Fun, Innovative Closed Fund and other innovative fund products. In institutional client assets custody, Bank of China has led the market in recent years. In 2002, Bank of China was elected one of the two National Social Security Fund custodian banks; In 2003, Bank of China was selected by the People's Insurance Company of China(PICC) as the only custodian bank for insurance funds, leading China insurance funds custody business, and established custody partnerships with a number of foreign and domestic insurance companies in succession; In 2004, Bank of China achieved intent of custody cooperation with many large enterprises including the power industry with corporate annuity, and firstly provided annuity custody services in normative sense to Maanshan Iron & Steel, Huaibei Mining and other large enterprises after the introduction of relevant regulations of corporate annuity; In 2005, Bank of China opened a number of custody service for market innovative of financial products, including custody of investment-linked insurance products, brokerage set financial plan, trust fund custodian, etc.; And by virtue of the comprehensive strength, Bank of China has been chosen by the China Development Bank as custody bank of the pilot credit asset-backed securities, entrusted with assets custodian of the Chinese-funded-Unicom CDMA network rental income scheme; In early 2006, Bank of China was also selected by Jilin Province Social Insurance Company as the only custodian to fund personal accounts of Basic Old Age Pension; In 2006, Bank of China was selected by Industrial and Commercial Bank of China as global custodian bank to proxy its QDII financial products, and on August 10 officially began the operation of foreign investment, becoming the first Chinese-funded bank providing global custody services for global investment of domestic customers; In the second half of 2007, Bank of China host "Harvest Overseas China Stock Equity Securities Investment Fund" for Harvest Fund Management Company, becoming the first fund QDII custody bank, and entering into global custody business cooperation with a number of QDII.

While serving domestic institution customers, Bank of China also dedicates to provide quality care services for qualified foreign institutional investors(QFII). It currently provides custodian services for seven QFII, and concludes custodian business relationship with a number of potential QFII, being the largest Chinese-funded QFII custodian bank, selected by a number of foreign banks as their QFII custodian business capital clearing agency bank, topping the industry.

To further strengthen risk control and continuously improve the risk management level of custody business, Bank of China pays attention to the international advanced risk management concepts and methods and applies them into the custody business practice, emphases internal control and straight-through processing(STP), implements the risk window forward shift, and takes the lead in the same industry to employ KPMG, PWC, EYGL and other internationally renowned accounting firms to regularly make special assessment on custody business internal control and reliability of custody system, to fully ensure the safety and soundness of custody business. In early 2008, custody business of Bank of China firstly obtained U.S. SAS70 and British AAF01/06 double standards certification issued by reputable international accounting firm.

Bank of China has set up more than 600 branches, subsidiaries and representative offices in 27 countries and regions, covering New York, London, Tokyo, Hong Kong, Frankfurt and Singapore and other major international financial centers, and established agent relationship with nearly 4,000 foreign banks. Relying on the traditional international business advantages and cooperation with global custodian banks as well as its continuous efforts, Bank of China has the confidence and ability to provide more safe, creditable, standardized, responsible, innovative and value-added custody services for global investment of domestic and foreign clients.

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