China’s ICBC Standard Bank has become the first Chinese lender to own a vault in London. The financial details of the deal remain a mystery, but the deal is expected to boost ICBC’s influence in the trading of precious metals.

Chinese bank exerting more control

In world economy ICBC is the world’s largest bank in terms of assets it holds. The bank’s been growing its precious metals business and the deal with Barclays will help it gain a stronger position in the industry.

The exact location of the bank within London remains a secret. According to the two parties it can hold up to 2,000 metric tons of precious metals, such as gold, silver and platinum. A large scale vault like this will provide ICBC more influence in terms of trading and pricing of these commodities.

Press Releases

Mark Buncombe, head of commodities at the ICBC Standard Bank, told in the press release, “This enables us to better execute on our strategy to become one of the largest Chinese banks in the precious metals market.

Trading in precious metals has been largely run by western banks and it has been mainly conducted in markets like London and New York. Despite this, China accounts for over a quarter of global economy gold demand.

Owning a vault in London will provide ICBC a higher profile in the market. It’s also clever marketing, as western-based clients are more inclined to store their gold and silver in the west rather than in China.

Why vaults matter?

Owning a vault is particularly important for trading metals, as they tend to have less industrial uses than metals like copper or lead. Precious metals are mainly stored as a measure of value. Due to constant trading of these metals, storing them in a vault is more convenient than moving it around.

ICBC’s vault joins six other commercial vaults in London, alongside the Bank of England’s vault on Threadneedle Street. The acquisition is expected to be finished in July.