China Construction Bank announced yesterday it has helped HSBC Holdings Plc submit its application to the China Securities Regulatory Commission for the position of qualified foreign institutional investor.

It enables CCB to become the first domestic lender selected by an overseas financial institution to act as a custodian bank for their QFII business in China.

HSBC invited several domestic lenders to bid for the right of being its custodian bank in early April.

HSBC, however, has not yet received a license to become a QFII.

Under the requirement of the CSRC and the State Administration of Foreign Exchange, a foreign financial institution has to entrust a custodian bank to handle it QFII application.

CSRC, SAFE and People's Bank of China, the country's central bank, has authorized six domestic banks as custodians, including Industrial and Commercial Bank of China, Bank of China, the Agricultural Bank of China, Bank of Communications, China Merchants Bank and CCB.

HSBC, Citibank and Standard Chartered Bank are the only three overseas banks that have received approval to conduct custodian banking services to QFIIs.

UBS AG and Nomura Holdings Inc, the first two QFIIs granted licenses last week, have both hired Citibank as its custodian bank for their pending investment into the Chinese A-share market.

ING has also sent an application to the CSRC for a QFII license, said Piter de Jong, a senior official of ING Bank China.

"Under our initial plan, we will invest around US$100 million into the A-share market," said de Jong.

QFII custodian banks provide foreign exchange conversion services, renminbi clearing, securities and cash settlement and reporting to regulators about QFIIs' investment.