Hong Kong and Seoul In a market first for Korea, Citi has partnered with Korea's central securities depository—the Korea Securities Depository (KSD)—to offer Korean securities companies, fund managers, and other local financial intermediaries the opportunity to lend their global equity portfolios to drive higher returns on idle asset holdings.
The partnership with the KSD will kick off with one of Citi's key clients, Shinhan Investment Corp, a leading local brokerage firm. Further clients are expected to be enrolled in due course and the partnership with the KSD may be extended to cover other financial assets.
Local Korean investors hold around US$570bn in global equities via direct and portfolio investments, according to Bank of Korea data, underlining the potential for growth in international securities lending amongst Korean investors.
Many Korean investors already participate in local Korean securities lending which is intermediated by the KSD. This new development allows those Korean investors to benefit from securities lending income on their offshore holdings.
"Securities lending is a crucial component of a developed financial market and this partnership will further enhance Korea's status as a leading global financial market. We are delighted to partner with Citi and use their global network to support local clients to maximize returns on their equity portfolios," said Kyong-Ryol Choi, Head of Securities and Fund Division.
"Citi is honored to be selected by the KSD as the first bank to offer local Korean clients access to global securities lending via their platform. Securities lending is a crucial element of an evolved financial market and this partnership will go a long way in cementing Korea's status as a leading global securities market," said David Russell, Head of Prime, Futures and Securities Services, Asia and Head of Markets, Hong Kong. Citi does business in over 160 markets and currently is active in 74 of these via securities lending.
Securities lending is where financial assets such as equities are transferred temporarily from a lender to a borrower in exchange for a fee, with collateral to back up the transaction. The borrower agrees to return the securities either when the lender demands it, or at an agreed-upon time.
Citi, the leading global bank, has approximately 200 million customer accounts and does business in more than 160 countries and jurisdictions. Citi provides consumers, corporations, governments and institutions with a broad range of financial products and services, including consumer banking and credit, corporate and investment banking, securities brokerage, transaction services, and wealth management.
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