Xin Hua Wang·2025-08-12 06:29Core Viewpoint - The custody business is increasingly valued by banks, with a total scale of nearly 26.24 trillion yuan in interbank fund custody as of March 23, 2023, dominated by state-owned and joint-stock banks, leaving regional small and medium-sized banks at a significant disadvantage [1][4]. Group 1: Regulatory Developments - The China Securities Regulatory Commission (CSRC) has approved Suzhou Bank's qualification for securities investment fund custody, breaking a pattern where no Chinese banks had obtained such licenses since 2014 [2]. - Currently, there are 48 institutions, including 21 banks, with securities investment fund custody qualifications, highlighting the stringent requirements for banks to obtain this status [2][3]. Group 2: Market Dynamics - The top three banks in terms of custody assets are Industrial and Commercial Bank of China, China Construction Bank, and Bank of China, with total assets of 3.87 trillion yuan, 3.63 trillion yuan, and 2.68 trillion yuan respectively [4]. - The market concentration is expected to remain high, with major state-owned and joint-stock banks continuing to dominate the custody market [4]. Group 3: Challenges for Regional Banks - Regional small and medium-sized banks, such as Jiangsu Bank with a custody asset scale of 338.2 billion yuan, face significant challenges in competing with larger banks [4]. - To grow their custody asset scale, these banks need to leverage their local advantages, meet regulatory requirements, and enhance collaboration with public funds and asset management institutions [4][5]. Group 4: Strategic Recommendations - It is essential for small and medium-sized banks to invest in talent and technology while aligning their strategies to expand custody asset scales effectively [5]. - A cautious approach is advised, where banks should not blindly enter the custody business but rather assess their resources and strategic goals before making decisions [5].