Corporate Banking

Banking on greater cooperation

by May Chan

Wendy Wong
general manager and head of China division
The Bank of East Asia Limited
Photo: Edde Ngan
Finance house reaches out to Hong Kong and mainland clients to facilitate regional and cross-border transactions and support services

Many companies and entrepreneurs are vying for business opportunities on the mainland, but only those that act fast and decisively end up with a slice of the cake in the mainland's highly competitive commercial world.

"In the past, foreign banks simply replicated their existing service models in mainland China, with little success," says Wendy Wong, general manager and head of China division, the Bank of East Asia Limited (BEA). "Overseas institutions conducting business on the mainland must take into consideration the unique features of the local culture and incorporate home-grown talent in the Chinese teams and maintain a global perspective."

Three decades of economic reform has transformed China's banking industry, which is currently dominated by local banks. In 2009, foreign banks accounted for around two per cent of the total assets of the banking industry in China. "There's still a lot of potential for international banks in the country," Ms Wong notes.

Robust growth

The pace of change is rapid particularly where new and improved IT infrastructures and electronic banking platforms allow new products and services to be offered by Chinese banking institutions.

To date, BEA's mainland network covers 24 mainland cities and with such a widespread market, customers are increasingly relying on electronic distribution channels to manage their wealth. "Without an excellent and constantly improving IT infrastructure, foreign banks will struggle to attract new clients," Ms Wong says.

When it comes to corporate business, local Chinese firms make up a growing proportion of the clientele for foreign banks in mainland China. There are three major categories of corporate client: state-owned enterprises, private and semi-private enterprises, and foreign invested enterprises.

While foreign invested enterprises traditionally make up a large portion of foreign banks' corporate banking business, the numbers are decreasing as more state-owned, private and semi-private Chinese companies go public and expand overseas, demanding a comprehensive range of banking services.

Personal banking has also become more sophisticated over the past decade. Clients in this sector, especially those with assets of RMB1 million or more, are looking beyond savings and loans to investments and wealth management.

Now with the private sector booming, people are looking to invest at home, in Hong Kong and abroad. There is great interest in the investment opportunities outside the mainland. The emerging need for cross-border services has, as a result, opened up a niche market for foreign banks that are experienced in handling international capital transactions and are knowledgeable about global practices.

Integrated system

Ms Wong stresses that it is crucial for international banks operating on the mainland to be sensitive to local customs and rules. They also need to be aware of changing regulations particularly in the areas of corporate governance and compliance.

"We strive to eventually integrate our Hong Kong and mainland banking offerings to provide a comprehensive range of services to customers," says Ms Wong, who feels that a one-stop service approach is key to attracting new clients and retaining existing ones. The bank's mainland branches work closely with its head office in Hong Kong to provide efficient and value added services to the clients.

The bank also holds regular seminars to update clients on global market developments, including the latest wealth management options, as well as providing information on overseas studies and emigration.

More than 90 per cent of the bank's mainland employees are local professionals who have the necessary market connections and knowledge. The bank tends to recruit from a number of mainland universities and at the same time values overseas education and work experience.

On the other hand, Hong Kong staff and their expatriate counterparts are also able to add value because of their international backgrounds and training. A professional qualification from the Hong Kong Institute of Bankers (HKIB) is a definite advantage. The HKIB works closely with banks on both sides of the border to improve communication, cooperation and integration, providing a platform for professionals to upgrade their skills.

Everybody wins

  • Great potential for foreign banks operating in mainland China
  • Efficient and mobile means of wealth management essential
  • Banking clients in both regions benefit from one-stop services

Taken from Career Times 12 March 2010, A12

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