HSBC to share custody with Jpmorgan of $52b in gold bars

LONDON: Jpmorgan will join HSBC in storing bullion for the world’s biggest gold-backed exchange-traded fund (ETF), the fund’s operator said, ending its rival’s sole guardianship of the $52 billion stash of gold.

The change, which begins on Dec.6, is a boon for Jpmorgan, which could rake in millions of dollars of storage fees.

HSBC had been the sole custodian for SPDR Gold Trust, also known as GLD, since it launched in 2004. The bank currently stores about 910 tonnes of gold for GLD in London -- around a quarter of all the gold held for ETFS globally.

“The addition of JPM will change the current, single-custodian and vault operating model, to accommodate the activity of the fund in anticipation of future growth,” the World Gold Council (WGC), which runs the fund, said in a statement.

WGC executive Joe Cavatoni said the council wanted to diversify its storage and adding Jpmorgan “gives us another commercial entity with a vested interest in supporting the product.”

He said the WG C would seek to funnel gold to Jpmorgan, for example by sending it new metal added to the fund, and held out the possibility of an eventual even split between the two banks.

“If we get to the point where there’s a very equal balance between the relationships, that would be exciting for us,” he said.

Typical fees for large clients like GLD are around 0.03-0.04 per cent of the value of the gold stored, a market source said. That means equal division of the fund’s 910 tonnes would see Jpmorgan take revenue of around $8-10 million a year from HSBC.