China grants foreign banks access to fund custody business

China will allow foreign banks to gain access to fund custody business in its market, as part of efforts to further open up the financial sector, the country's securities and banking regulators said Friday.

Eligible Chinese branches of foreign banks will be able to apply for permits for fund custody business, according to the newly-revised fund custody rules jointly issued by the China Securities Regulatory Commission and the China Banking and Insurance Regulatory Commission.

Applicants should have sound internal control mechanisms and good business performance, with major indicators including the scale of fund custody business, profits and market share ranking among the top in the world in the past three years, according to the rules.

While allowing applicants to use performance indicators of their overseas headquarters, the rules also revised the bar for net assets to 20 billion yuan (about 2.86 billion U.S. dollars) for applicants.

The rules also specified that headquarters of foreign banks should bear civil liability for their Chinese branches and put in place a liquidity support mechanism commensurate with the scale of their fund custody business in China.