Core Viewpoint - The recent withdrawal of fund custody qualification applications by Guangzhou Bank and Chengdu Rural Commercial Bank reflects the impact of increased regulatory entry barriers set by the China Securities Regulatory Commission (CSRC) [2][5]. Group 1: Regulatory Changes - The CSRC raised the entry threshold for banks applying for fund custody qualifications, increasing the net asset requirement from 20 billion yuan to 50 billion yuan [5]. - The revised regulations also require institutions to have a regulatory rating of at least level 2 for commercial banks or A for securities companies over the past three years [5]. - As of October 10, only two institutions, Mengshang Bank and Dongwu Securities, remain in the queue for fund custody qualification applications [3][4]. Group 2: Market Dynamics - A total of 68 institutions currently hold fund custody qualifications, with 36 being banks, including 6 state-owned banks, 12 joint-stock banks, and 11 city commercial banks [3]. - The fund custody market is dominated by a few large banks, with the top 15 institutions holding a combined market share of 87.89% [7]. - The fund custody business is crucial for banks as it provides non-interest income, helping to optimize revenue structures and reduce reliance on traditional interest income [6][8]. Group 3: Financial Performance - Guangzhou Bank's net commission income has been declining since 2021, with a year-on-year decrease of 8.13%, 2.79%, and 13.59% for 2022, 2023, and 2024, respectively [6]. - The specific income from "custody and other entrusted business commissions" has also seen a significant drop, with a 44.65% decrease from 2023 to 2024 [6]. - Despite meeting regulatory asset size and rating requirements, Guangzhou Bank's public fund sales retention scale did not rank in the top 100 as of mid-2025 [5].