Northern Trust has been given permission by the Chinese government to offer global custodial services to institutional clients through an office in Beijing, the company announced Tuesday.
Northern Trust has had a representative office in the Chinese capital since 2005, though Steve Fradkin, president of Northern Trust Corporate and Institutional Services, said in a phone interview that client services had to be handled through Singapore or Hong Kong.
Mr. Fradkin said Northern Trust has been global custodian for both China’s $130 billion National Council for Social Security Fund and the Bank of Communications, which is considered to be one of the largest commercial banks in China.
He declined to specify how much in assets under custody Northern Trust has in China.
Northern Trust views China as an exciting, developing market for global custodians, Mr. Fradkin said.
“It has the largest population and the second-largest economy in the world and its asset management industry has more than tripled since 2005,” Mr. Fradkin said. “Yet global custody is still a developing concept in China, as investors move to global markets in a measured fashion.”
Mr. Fradkin said Northern Trust estimates the potential market for institutional global custody services in China at $950 billion, $600 billion in the insurance segment and another $350 billion in mutual funds. He said only about $50 billion is currently invested outside of China.
Only a handful of non-Chinese companies have received permission to enter the Chinese marketplace as global custodians. Bank of New York Mellon spokesman Michael Dunn said the company received permission to open a global custodian office in Beijing several months ago.