Last updated at: (Beijing Time) Tuesday, November 11, 2003
Hang Seng Bank expands
Hang Seng Bank of Hong Kong plans to invest as much as HK$200 million (US$25.7 million) to expand on the Chinese mainland by opening a branch in Beijing as earnings slump in its home market.
Hang Seng Bank of Hong Kong plans to invest as much as HK$200 million (US$25.7 million) to expand on the Chinese mainland by opening a branch in Beijing as earnings slump in its home market.
"We have applied to the China Banking Regulatory Commission and are still waiting for approval," Chief Executive Vincent Cheng said in an interview in Shanghai.
The bank also became the first Hong Kong lender to expand its network when it opened a sub-branch in Shanghai yesterday after the signing of a recent free-trade agreement between the two financial hubs.
Hang Seng Bank, a unit of HSBC Holdings Plc, is turning to China, where the economy grew by 8.5 percent in the first nine months from a year earlier to 7.91 trillion yuan (US$955.3 billion) to earn fees as the Hong Kong economy slumps. Hong Kong's economy is expected to grow 3 percent this year.
The 62-percent-owned unit of HSBC is also looking to invest in local banks as part of its expansion.
"We are interested and we are still looking for a strategic partner," said Cheng. He declined to say whether Hong Kong's second-biggest listed lender is negotiating to take a stake in China Minsheng Banking Corp as reported earlier this year by the Financial Times.
The sub-branch, which is expected to start operations next month, will offer the same scope of renminbi and foreign currency services as its Shanghai branch in Pudong.
Cheng said that it is necessary for the bank to follow its many Hong Kong clients who are flocking to Shanghai, the financial and commercial center on the mainland.
The lender has branches in Shanghai, Guangzhou, Shenzhen, Fuzhou and Nanjing and representative offices in Beijing and Xiamen. T
he bank also plans to open a branch in Hangzhou in Zhejiang Province, Cheng said.
Hong Kong banks will also get easier access to the mainland banking market from next year as the Closer Economic Partnership Arrangement has lowered the threshold for them to expand on the Chinese mainland.
Under the accord, the minimum global asset requirement for a mainland branch application will be lowered to US$6 billion from US$20 billion for Hong Kong banks.
The waiting period for a follow-on renminbi banking license will be reduced to two years from three.
"The more relaxed market entry agreement will offer Hong Kong banks a leeway for future growth," said Timmy Leung, vice president of the Bank of East Asia Ltd's Shanghai Branch. "The competition in the banking market in Hong Kong is just too fierce."
In Hong Kong, a city of 6 million people, BEA has more than 100 banking outlets, while it has established one branch and a sub-branch in Shanghai, a city of 13 million residents.