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Foreign banks’ advantages lie in their globalized network and services. They are shifting their focus from developed markets to emerging markets due to the European debt crisis. In addition, the Chinese companies are actively developing in the overseas markets. These bring great opportunities for foreign banks to recruit some big Chinese state-owned enterprises (SOEs) as their customers,” said Melvin Teo, managing director and executive president of DBS China.
A group of incomplete data shows that mainland China contributes to a quarter of the credit loans of Bank of East Asia; Bank of Overseas Chinese saw its net profits before tax in China have a 450-millionyuan increase in 2011, triple of one in 2010. Meanwhile, DBS China had its net profits increase by 100% in 2011, turning China into its third biggest market in the world.
With the growing importance of the Chinese market, many foreign banks began to list the engagement with big SOEs of Chin as an index for their business review. Some foreign banks are increasing their presence in China though they are cutting jobs in other countries.
Big SOEs as the key potential customers
In 2011, many foreign banks saw drastic increase in their business in China. As the Chinese market is becoming more and more important, foreign banks have promised to increase their investment in China and speed up their strategies of localization in China.
A foreign bank’s insider said that the management team of the bank had already listed the growth rate of local customers as an important index and required substantial growth.
Those foreign banks simultaneously consider big SOEs in China as great potential targets for their development in the future.
Compared with Chinese domestic banks, foreign banks’ globalized network could provide globalized services. An insider from DBS Bank said that the Chinese banks had obvious advantages in China but lacked efficient network and business experiences in other Asian areas where foreign banks have great experiences.
Melvin Teo said that one of DBS China’s strategic keys in 2012 was to recruit clients from big Chinese companies. Moving from service supplier for foreign companies and small- and medium-sized enterprises (SMEs) in China to the one for big companies, the shift of DBS and other foreign companies are granted with a big space of business development in the future.
In order to further implement the strategy of localization, DBS Bank will employ more client mangers having good relations with Chinese SOEs and big companies to form a management team full of China-related experiences.
A senior executive of Standard Chartered China said that the recent European debt crisis moved the trade core from European market to Africa and Asia. In addition, Chinese companies’ eagerness to “go out” means more opportunities for foreign banks to provide services or assistance for Chinese companies in overseas acquisitions and establishing overseas braches.
Nearly all major foreign banks in China have already expressed their hope of working with big SOEs in China in their financial reports.
Impeded by capital amount
It is known that foreign banks have been planning to recruit Chinese SOEs as their clients since 2007 when they are allowed to establish corporate banks in China. But they were incapable to do this because of their capital impotency.
A director of the Department of Legal Affairs and Compliance at a foreign bank said: “We once lent 100 million yuan of loans to Poly Real Estate. But this amount is meaningless for SOEs.”
This director said that the SOEs of China usually needed multi-billion yuan of credit loans. The regulatory department of China required that the amount of loans a foreign bank lent to a single corporate client could not account for more than 10% of its capital and proportion of loans lent to a single group-level client should not be higher than 15%.
According to the public data, the branches of HSBC and Bank of East Asia in China are ranked top in registered capital among foreign banks. HSBC China once increased the amount of its registered capital from 2.8 billion yuan to 10.8 billion yuan in November 2011, thus it was allowed to lend billions of yuan of loans maximally to a single grouplevel client. The other foreign banks’ registered capital only amounted to billions of yuan and thus each of them could only lend several hundreds of million yuan to one client, far less than SOEs’ requirements.
Most of the cases in which foreign banks served the Chinese SOEs are featured with overseas financing services. In comparison, the Chinese banks provide more kinds of services for SOEs.
Growth against the Trend
Hangseng Bank China saw its profits before tax increase by 8 times to 482 million HK dollars in 2011, which was the biggest growth among all foreign banks in China. The domestic business in China contributed to 22% if its entire profits before tax, higher than the 15% contribution in 2010.
Meanwhile, Standard Chartered’s revenue in China increased by 17% to 825 million U.S. dollars and the profits doubled to 220 million U.S. dollars in 2011. Bank of East Asia’s China branch had a 71.03% increase to 2.444 billion HK dollars, accounting for one quarter of East Asia Group’s total profits. In 2011, Bank of East Asia China lent 1.36 trillion HK dollars of loans to its clients in mainland China, taking 42% of the total loans lent by East Asia Group.
Singapore-based DBS Bank saw it net profits double in 2011. The amount hit 500 million yuan, making mainland China the third largest contributor to DBS Bank’s revenue.
David Li, board chairman of Bank of East Asia said that the market of mainland China was very important and Bank of East would further penetrate into the market.
Piyush Gupta, executive president of DBS Bank confirmed DBS Bank’s plan of increasing its investment in China for improving the performance in China.
Piyush Gupta forecasted that the revenue from mainland China would account for one third of DBS Bank’s total income within 1-2 years. The proportion of DBS China’s revenue in the DBS Group’ total income is going to increase from the presentday 5% to 10%-15% in ten years.
HSBC Holdings announced on March 13 that its development strategies in Asian-Pacific Regions are to keep the balance and diversification of businesses and regions, with the emphasis on investment in six major markets and two strategic markets in the Asian-Pacific Regions while boosting the development in other markets.
A group of incomplete data shows that mainland China contributes to a quarter of the credit loans of Bank of East Asia; Bank of Overseas Chinese saw its net profits before tax in China have a 450-millionyuan increase in 2011, triple of one in 2010. Meanwhile, DBS China had its net profits increase by 100% in 2011, turning China into its third biggest market in the world.
With the growing importance of the Chinese market, many foreign banks began to list the engagement with big SOEs of Chin as an index for their business review. Some foreign banks are increasing their presence in China though they are cutting jobs in other countries.
Big SOEs as the key potential customers
In 2011, many foreign banks saw drastic increase in their business in China. As the Chinese market is becoming more and more important, foreign banks have promised to increase their investment in China and speed up their strategies of localization in China.
A foreign bank’s insider said that the management team of the bank had already listed the growth rate of local customers as an important index and required substantial growth.
Those foreign banks simultaneously consider big SOEs in China as great potential targets for their development in the future.
Compared with Chinese domestic banks, foreign banks’ globalized network could provide globalized services. An insider from DBS Bank said that the Chinese banks had obvious advantages in China but lacked efficient network and business experiences in other Asian areas where foreign banks have great experiences.
Melvin Teo said that one of DBS China’s strategic keys in 2012 was to recruit clients from big Chinese companies. Moving from service supplier for foreign companies and small- and medium-sized enterprises (SMEs) in China to the one for big companies, the shift of DBS and other foreign companies are granted with a big space of business development in the future.
In order to further implement the strategy of localization, DBS Bank will employ more client mangers having good relations with Chinese SOEs and big companies to form a management team full of China-related experiences.
A senior executive of Standard Chartered China said that the recent European debt crisis moved the trade core from European market to Africa and Asia. In addition, Chinese companies’ eagerness to “go out” means more opportunities for foreign banks to provide services or assistance for Chinese companies in overseas acquisitions and establishing overseas braches.
Nearly all major foreign banks in China have already expressed their hope of working with big SOEs in China in their financial reports.
Impeded by capital amount
It is known that foreign banks have been planning to recruit Chinese SOEs as their clients since 2007 when they are allowed to establish corporate banks in China. But they were incapable to do this because of their capital impotency.
A director of the Department of Legal Affairs and Compliance at a foreign bank said: “We once lent 100 million yuan of loans to Poly Real Estate. But this amount is meaningless for SOEs.”
This director said that the SOEs of China usually needed multi-billion yuan of credit loans. The regulatory department of China required that the amount of loans a foreign bank lent to a single corporate client could not account for more than 10% of its capital and proportion of loans lent to a single group-level client should not be higher than 15%.
According to the public data, the branches of HSBC and Bank of East Asia in China are ranked top in registered capital among foreign banks. HSBC China once increased the amount of its registered capital from 2.8 billion yuan to 10.8 billion yuan in November 2011, thus it was allowed to lend billions of yuan of loans maximally to a single grouplevel client. The other foreign banks’ registered capital only amounted to billions of yuan and thus each of them could only lend several hundreds of million yuan to one client, far less than SOEs’ requirements.
Most of the cases in which foreign banks served the Chinese SOEs are featured with overseas financing services. In comparison, the Chinese banks provide more kinds of services for SOEs.
Growth against the Trend
Hangseng Bank China saw its profits before tax increase by 8 times to 482 million HK dollars in 2011, which was the biggest growth among all foreign banks in China. The domestic business in China contributed to 22% if its entire profits before tax, higher than the 15% contribution in 2010.
Meanwhile, Standard Chartered’s revenue in China increased by 17% to 825 million U.S. dollars and the profits doubled to 220 million U.S. dollars in 2011. Bank of East Asia’s China branch had a 71.03% increase to 2.444 billion HK dollars, accounting for one quarter of East Asia Group’s total profits. In 2011, Bank of East Asia China lent 1.36 trillion HK dollars of loans to its clients in mainland China, taking 42% of the total loans lent by East Asia Group.
Singapore-based DBS Bank saw it net profits double in 2011. The amount hit 500 million yuan, making mainland China the third largest contributor to DBS Bank’s revenue.
David Li, board chairman of Bank of East Asia said that the market of mainland China was very important and Bank of East would further penetrate into the market.
Piyush Gupta, executive president of DBS Bank confirmed DBS Bank’s plan of increasing its investment in China for improving the performance in China.
Piyush Gupta forecasted that the revenue from mainland China would account for one third of DBS Bank’s total income within 1-2 years. The proportion of DBS China’s revenue in the DBS Group’ total income is going to increase from the presentday 5% to 10%-15% in ten years.
HSBC Holdings announced on March 13 that its development strategies in Asian-Pacific Regions are to keep the balance and diversification of businesses and regions, with the emphasis on investment in six major markets and two strategic markets in the Asian-Pacific Regions while boosting the development in other markets.