Citibank confirmed today that its application to provide custodial services to Qualified Foreign Institutional Investors (QFIIs) in China had received the approval of the People’s Bank of China (PBOC). This is the first of three approvals Citibank will need. The other regulators which must endorse its application are the China Securities Regulatory Commission (CSRC) and the State Administration of Foreign Exchange (SAFE).
Citibank is amongst the first batch of foreign banks to receive such approval from the PBOC. The others include HSBC. The domestic banks to have secured licences to act as custodians are Industrial and Commercial Bank of China, the biggest State-owned bank, the Bank of China and China Merchants Bank.
The QFII scheme, announced on 8 November last year, allows foreign investors into the Renminbi-denominated A share market for the first time. To qualify, a QFII custodian must have a specific fund custody department; paid-up capital of at least Renminbi 8 billion; professional expertise; the ability to manage fund assets safely; and the qualifications to conduct foreign exchange and Renminbi business; and a clean record in terms of foreign exchange regulations in the last three years.