Gold Exchange Initiated by Chinese Commercial Banks

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Last updated at: (Beijing Time) Wednesday, October 23, 2002

Gold Exchange Initiated by Chinese Commercial Banks

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The Shanghai branch of the Industrial and Commercial Bank of China (ICBC) purchased 3 kg of gold from a Chinese gold company at the price of 83.5 yuan (10.2 US dollars) per gram at the Shanghai Gold Exchange (SGE) Tuesday.

The sale worth 250,500 yuan (30,500 US dollars) marks the first gold exchange operated by commercial banks since the founding of new China in 1949.

China's four state-owned commercial banks were authorized by the People's Bank of China (PBC) to deal in gold shortly after the SGE was established last year.

Besides spot transactions and clearing, the banks can also act as an agent of the SGE to operate with gold in eight areas including bartering, leasing and purchasing, and project financing.

The ICBC has become the clearing bank and one of the first council members of the SGE, according to the head of the Shanghai branch.

Insiders said the first gold exchange is extremely significant for China's commercial banks as it not only varies the assets operations and raises management efficiency, but provides the banks with gold sources, which will help to reduce financial risks.

At present, the commercial banks provide such gold transactions as exchange, clearing and trusteeship. With the further opening of the gold market, they will also be able to provide gold investing business for individuals at branch counters or through the telephone and Internet.

Besides the ICBC, the other three state-owned commercial banks are the Agricultural Bank of China, Bank of China and the China Construction Bank.

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