China's largest bank ‘buys lease’ of 1,500 tonne gold vault in London

The reported deal marks the Industrial and Commercial Bank of China's growing footprint in London's bullion market

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The investment arm of China's largest bank, Industrial and Commercial Bank of China (ICBC), is reportedly buying the lease of a gold and silver vault in London.

As Western banks move away from commodities trading due to heavy regulation and decreasing profits, the purchase would signal ICBC Standard's growing presence in the London bullion market.

The initial price for the lease of the 1,500 tonne vault was $4 million (£2.8 million), a source told Reuters, but it has since dropped significantly.

The vault is currently owned by Deutsche Bank and managed by security firm G4S.

ICBC Standard Bank is an investment division of China's largest bank, ICBC. It was formed in February 2015 when ICBC bought a controlling stake in South African lender Standard Bank's London-based global markets division.

ICBC Standard has also applied to become a clearing member of London’s $5 trillion gold and silver over-the-counter market.

This would mean the bank would join the five others - JP Morgan, HSBC, Bank of Nova Scotia, Barclays and UBS - which currently settle all daily bullion transactions between traders. ICBC's application will be decided by vote later in the year.

Deutsche Bank gave up its clearing membership in 2015 after winding down its trade of physical precious metals.