Abstract: Under the trend of financial disintermediation, the growth model of commercial banks has gradually transformed from capital-dependent to low-capital consumption. The asset custody business occupies less capital. In addition to stable custody fee income, it also increases stable capital precipitation, creates intermediate income, and creates multiple associated benefits such as settlement, foreign exchange settlement and sales. The business synergy is significant, making it the preferred strategic choice for banks. The comprehensive contribution of intermediary business continues to increase. Since 1998, the asset custody business of commercial banks (hereinafter referred to as the “custodian business”) has grown in scale, with a wider range of services, an increasing number of customer types, and deeper market participation, all of which have a positive impact on the Risk management and control of custody business has put forward new requirements. This article analyzes some risk points existing in the custody business and attempts to propose relevant countermeasures, hoping to be helpful to the steady development of the custody business.

Keywords: bank; custody business; risk; prevention

1. Introduction to custody business

(1) What is custody business

"Commercial bank custody business" refers to the behavior by which a custodian bank performs asset custody responsibilities, handles fund clearing and other agreed services, and collects relevant fees based on legal provisions and contractual agreements. According to laws, regulations and contractual agreements, the services provided by the custodian bank may also include accounting and valuation, investment supervision, performance evaluation, investment management comprehensive financial services and other asset service businesses. As an important part of the modern financial industry, the asset custody industry has introduced a custody mechanism into the multi-level capital market. This mechanism eliminates market information asymmetry, improves asset management and transaction efficiency, protects investors' asset security, and promotes market health. Development and other aspects play an irreplaceable role. For commercial banks, the income from custody business is stable and does not occupy economic capital. Especially for custody assets, due to regulatory requirements, a certain proportion of cash assets must be retained to deal with various situations. Such assets often exist in the form of demand deposits, and in the interest rate market It has become a rare stable, large-scale and high-quality deposit in the globalized environment. In addition, the custody business department can also establish a linkage mechanism to fully integrate internal capital, channels, projects and other resources to provide customers with a package of comprehensive financial service solutions. In the context of the "new normal" of my country's economic development, commercial banks are facing the new market competition landscape and have seen the advantages of custody business. They have spared no effort to increase investment in this "capital-saving" intermediary business and improve The strategic position of the custody business promotes the transformation of the business structure into an asset-light one. As of the end of June 2016, the asset custody scale of my country's banking industry exceeded one hundred billion yuan for the first time, reaching 103.5 trillion yuan, a year-on-year increase of 53.6%. Since 2012, the growth rate of the asset custody scale of China's banking industry has remained above 50%, and has been increasing year by year. While the scale of the industry continues to grow rapidly, market participants are also constantly expanding. There are now 27 domestic commercial banks with public fund custody qualifications, among which the asset custody scale of ICBC, which ranks first, has reached 13 trillion yuan.

(2) Key points of custody business

Asset custody business mainly serves the asset management industry and is an important platform and link connecting investment and financing market entities. Its key points are mainly: Diversity of customers. The rapid development of the asset management industry in recent years has brought about an increasingly rich and diverse custody customer resource, which has expanded from the initial single fund management company to insurance companies, securities firms, QFII (qualified foreign investors), companies that have established corporate annuities, etc. There are many types of services. The custody business mainly provides basic services in five aspects: asset custody, fund settlement, accounting, asset valuation and investment supervision. It can also provide value-added services such as foreign exchange transactions, corporate actions, risk performance, and accounting outsourcing. Such value-added services often become the focus of custodian banks' competition for customers. Involving a wide range. Custody business involves almost all investment varieties in the capital market, covering domestic and overseas markets. We need to face all regulatory authorities in my country's financial industry, from the People's Bank of China, the China Insurance Regulatory Commission, the China Banking Regulatory Commission to the State Administration of Foreign Exchange, and even the Ministry of Labor and Social Security. Operational complexity. The characteristics of the hosting business are a very large amount of data, many types of reports, very complex market rules, a lot of customer customization, and high requirements for accuracy and timeliness.

2. Risk points of the custody business

With the continuous deepening of reform and the steady development of the capital market, the custody business has also ushered in broad development opportunities. At the same time, it also faces risks. There are Some potential problems and weak links:

(1) Business system risk

Currently, most custody banks are using outsourced custody business systems, and due to historical reasons, centralized systems cannot be implemented Management and data sharing, automation and batch processing capabilities are low. In the context of rapid market growth, the system has struggled to support and is overwhelmed. It is also plagued by various patches that have gradually accumulated, becoming a bottleneck for business development. . The inability to meet the requirements of various emerging innovative products has greatly affected business efficiency and quality, while increasing operational risks. Some personalized needs cannot be realized due to the inherent system architecture limitations of the outsourced system. Customers often switch to other banks because the custodian bank cannot provide certain functional services.