Koos Jansen
BullionStar Blogs
Koos Jansen
Posted on 24 Feb 2014 by

Precious Metals Aspirations Of The Biggest Bank In The World: ICBC

Notes from LK: Below you can read an interview with the head of the precious metals department of ICBC (Industrial & Commercial Bank of China), the world’s largest bank by assets and market cap. In a way it’s like the other side of the memo from the Chinese Government on gold policy we published earlier. On one hand, you see the policy directives in the memo carried out in practice. On the other, you can detect that this is just what the policy makers want to hear,  how it’s the bank’s proud mission to bring the country into a stronger position in the international capital arena. Note the way they see that international capital markets and the players are intricately related to gold. Whichever way, they aspire to be a global player with their own full set of world-class systems and infrastructure. Being the world’s largest bank, what can stop them?

Translated by LK in Hong Kong:

The “Chinese dream” of ICBC’s Precious Metals Department  – an interview with Zhou Ming

January 7, 2014
ICBC logo
“In case of changes in the market environment, we must prepare to meet the different needs of innovative products and services.” Zhou Ming, head of the precious metals department for ICBC, summarizes.

International gold prices fell sharp on uncertainty of Fed monetary policy changes. Most participants in the gold market in 2013 have gone frightened. In charge of a leading precious metals business unit for the country, Zhou Ming has never allowed his team to be lost in confusion. Two years ago ICBC foresaw the possibility of large scale volatility in the gold market and started developing products, services and marketing

to prepare for this. Hence, ICBC launched gold accumulation schemes, swaps, forward hedging, lease/financing, collateralized loans and other financial services ahead of time. Developing to ongoing investment and consumption needs of the market, which produced good business results. For retail and institutional investors his department also launched products that adapt to the market. In 2013, ICBC physical gold sales increased by more than 80% YoY, the growth rate of the entire line of business also grew more than 30% over the previous year.

The bank’s precious metals department has many natural advantages. With more than 300 million customers and a more than 17,000 points sales network, the rapid rise of it’s business isn’t surprisingly. More importantly, large banks have many operational advantages. Corporates have experience in trading on the spot market, while banks can participate in the international market through five lines of business available to them: physical dealing, trading, financing, leasing and wealth management. Additionally, international commodities business requires cross-border, cross-product, cross-market, on-shore/off-shore, exchange/OTC spot and futures trading capabilities. Compared to other institutions, banks have more all-round global network transaction capabilities. This is also why the precious metals departments are growing so fast in Chinese banks.

Zhou Ming’s confidence is not limited to this. For him, the growth of the precious metals business is not accidental. Aside from ICBC’s management forward-thinking and advantages from being a bank, it’s also because in China’s internationalization process banking institutions are required to play this role.

When the precious metals department was established, ICBC chairman Jiang Jianqing said: “We have the ambition that ICBC becomes a world-class commercial bank in precious metals investment management.”

When serving as a general manager of Shanghai Industrial Investment (Holdings) Finance in Hong Kong, Zhou Ming experienced the Asian financial crisis, seeing the Hang Seng Index and the company’s shares tumble but couldn’t do anything about it. “A business manager under a planned economic system has no idea about financial crises in free economies”, he recalled, still feeling the fear. “It was frustrating and painful, when each blow came, no matter how you try yourself to face it, it ends up in defeat. it’s humiliating.” That taught him how slow and passive Asian capital markets are in the wider international landscape, and let him witness for the first time how miserable it is to be weak in the merciless international capital markets.

“Too few people take part in the actual Wall Street transactions. Too few understand the operations in this international game. Too few participate in the global flow of capital transactions. We didn’t know what was happening until after the facts. We were besieged and were only part of the losers.” Zhou Ming sighed. “I thought, one day China enters the international stage, we will need more people to participate in understanding the characteristics of capital flows, so we don’t have to be so passive.”

Now Zhou says, “I drive our traders to work on scale and quantitative problems of our platform for the possibility of taking part in international transactions.” In addition , ICBC has been introduced to Wall Street private equity and global financial transaction specialists, research models, product planning, and ways to analyse counter-party moves. Over the past year, our precious metals department has greatly benefitted and has become a radar through which to monitor markets.

Today, the establishment of the Shanghai Free Trade Zone has provided an additional stimulant for our department. “The State is building an open market right at our door step, which lets us test the water and practice before swimming. We will use this to learn some skills.” he said.

According to Zhou, ICBC’s precious metals department is working with HSBC, JP Morgan Chase, Brink, Metalor and other professional logistics providers, manufacturers and warehouse operators to communicate and learn about storage, transport, monitoring etc. If successful the ICBC precious metals department will have a a repository that is up to international standards for any insurance purposes in the FTZ in 2014.

This aside, Zhou Ming is also constantly working to expand his territories in the international area. In the first half of 2014, his department will have a trading exchange center in Hong Kong, to help settle with demands from Southeast Asia. “Because the USD can be used for settlement in Hong Kong, it is more direct and entirely on an international standard. This helps integrate the global trading capability of Hong Kong to supply a better internationalized product for South East Asia including China.”

For the future, Zhou Ming’s goals are clear and simple: to continue to build the precious metals “battleship”, heading towards international markets. “In 2013 China became the world ‘s largest gold producer and consumer, there is no reason for it not to have any voice in international price fluctuations.” Zhou Ming said, “This must be the aim of ICBC, to service the market and our customers competitively.”

Koos Jansen
E-mail Koos Jansen on:

E-mail address:

Tell us about yourself and your existing or proposed blog:

  • Hugh

    So clearly ICBC’s goal is to actively participate in precious metals rehypothecation and leasing schemes so as to manipulate prices just like large insolvent western banks. How is this a good thing?

    • Wil Martindale

      You have absolutely read my mind Hugh. But I suspect that if they’ve “learned” anything from Wall Street so far, it is to rehypothecate the outward facing Truth.

      I suspect we are seeing here the Influence of Sun Tzu moreso then Benbr Nan Ke.

      • Hugh

        Since I posted this last night I’ve thought that the only thing that makes sense is the Asian business philosophy: Patiently, over time, gain control of a market and then reap huge profits. That agrees with Sun Tzu I think.

        • Wil Martindale

          No doubt. This culture’s semantic is an odd read when transcribed. I’m not sure I understand the nuance (if there is any) but I definately understand the strategy. I suppose one could see them as “barbaric”. But perhaps it is more, as Benbr calls it, a matter of “tradition”.

  • Peter Trzaska

    The one and only genuine gold expert has elected to bypass China. It’s fun watching pompous and arrogant Westerners line up to be hung,drawn and quartered. Should it not be as clear as day to you that Chinese biz nous has long been far more sophisticated, her investment models and strategies far more intricate than claimed in the article? The Chinese know exactly how to feed the Western ego, and how to game play the inferior Western mind. Those of you who think you are getting a jump on others by gaining a presence there, those of you already there, will shortly find out you could scarcely have taken a worse turning. Not so ANOTHER and his group. But then that group comprises those who are nobody’s victim.

  • Michaelprotects

    I would say China is behind the curve in their deserved place. Already the largest producer, consumer, and physical delivery market, but they play no role in price discovery? ?

    time to wake up and smell the Dim Sung guys, you should have owned this market years ago.

  • micheal

    i know jewish is the one who control the gold price…
    they never sell their gold..
    they live by robbing other’s people gold
    i know jewish since i was born..
    they all intelligent , but Allah MOST INTELLIGENT than Jewish

Copyright Information: BullionStar permits you to copy and publicize blog posts or quotes and charts from blog posts provided that a link to the blog post's URL or to https://www.bullionstar.com is included in your introduction of the blog post together with the name BullionStar. The link must be target="_blank" without rel="nofollow". All other rights are reserved. BullionStar reserves the right to withdraw the permission to copy content for any or all websites at any time.