Bank of China Limited : China Daily: BOC leads international charge
07/02/2012| 02:47am US/Eastern
Overseas business, renminbi settlement fueling growth
The only Chinese bank in continuous operation for 100 years,
Bank of China Ltd (BOC) will continue to expand its overseas
network to further develop its transnational business, said
executives of the giant State-owned commercial lender.
They added that they envision BOC will become a truly
world-class bank by 2020.
"Our roots in the domestic market, yet operating across
borders, distinguishes BOC from its domestic
counterparts," said Xiao Gang, board chairman of the
"We will use both international and domestic markets and
resources to accelerate development of a customer-focused,
market-oriented global service system," he said.
The expansion "will enhance the bank's global
services and brand value", Xiao added.
Board members have made overseas business a strategic
priority, so the lender will continue to increase its number
of branches worldwide while prudently considering
acquisitions, the bank said earlier.
In the first half of 2011 alone BOC established more than 20
new foreign branches.
By the end of last year, BOC had 586 overseas outlets in 32
countries, as well as Hong Kong, Macao and Taiwan, with
Before the founding of the People's Republic of China in
1949, Bank of China had 34 branches in 14 countries or
regions after establishing its first overseas branch - also
the first by any Chinese financial institution - in London in
To extend its network overseas, the bank has also used agent
In 1929, the bank has 17 agent banks in the United Kingdom
and the United States.
As China opened up, agency relationships were developed
around the world. Initially concentrated in Western Europe
and Southeast Asia, the bank went on to forge ties with 1,500
agent banks in more than 180 countries and regions by the end
Last November, BOC was selected as a global systematically
important financial institution by the Financial Stability
Board, becoming the first commercial lender from an emerging
market to join the "too big to fail" club.
In December, the rating agency Standard & Poor's raised
BOC's rating from A-minus to A, citing the "very
high likelihood of extraordinary government support" in
the event of financial distress.
The bank also has competitive advantages in international
clearing and settlement services that facilitate Chinese
business expansion overseas.
It has supported more than 1,300 projects with a combined
contract value of $190 billion in 100 countries and regions.
In January, the bank announced its international renminbi
settlement surpassed 1.7 trillion yuan in 2011.
It has 24 foreign institutions providing customers with
renminbi settlement services. BOC (Hong Kong) Ltd handled
more than 550 billion renminbi, while other overseas
institutions processed more than 430 billion in Chinese
As the largest international settlement bank, BOC is the
global leader with more than 500 clearing accounts at
BOC (Hong Kong) Ltd and its Macao branch were appointed by
the central bank as the only clearing banks for Chinese
currency transactions in the two special administrative
"In addition, we have more than 10,000 branches in the
domestic market, which is a major advantage as the cost of
establishing more branches is lower than for major foreign
banks," said BOC President Li Lihui.
In addition to its efforts to serve Chinese clients expanding
overseas, BOC is also gearing up to penetrate the local
"We expect to expand business in Asia first to enhance
penetration. In developed markets such as Europe and the US
we'd like stable growth in business relationships with
large international companies and enter the mainstream market
gradually," said a statement from the bank.
Eyeing foreign markets for diverse growth
Bank of China Ltd, one of China's four biggest commercial
lenders in market value, sees greater business potential by
expanding into overseas markets.
"BOC, the most internationalized Chinese lender, seeks
to be the right partner for many Chinese companies hoping to
achieve more success by expanding abroad," said the
Foreign direct investment (FDI) from China has risen steadily
in the past nine years. Non-financial direct investments from
China to 132 countries and regions exceeded $60 billion, 1.8
percent higher from a year earlier, according to data
released by the Ministry of Commerce on Jan 18.
FDI growth slowed down last year, Shen Danyang, spokesman of
the ministry, said, but government policies that encourage
enterprises to expand overseas would not change, and
officials are prepared to carry on in support of these
"Commercial lenders have become more aware of better
business opportunities as global projects are becoming
increasingly diversified. Bank of China will still focus on
the national economy to attract more domestic clients.
However, the bank is establishing a large international
banking conglomerate that could carry forward more
cross-border benefits," said Xiao Gang, board chairman
Sinopec Group, one of the leading Chinese petroleum
companies, has cooperated with BOC for 20 years out of the 29
years of its existence.
"Its current business relationship no longer just
involves borrowing and lending, but has transformed into an
all-round strategic partnership," said Liu Yun, chief
accountant at Sinopec.
Liu said the bank enjoys special advantages with financing in
foreign currencies on behalf of its corporate clients.
"It has built up lending centers in Europe, the
Americas, and Asia-Pacific regions to meet the demands of
companies to provide a full range of services. As one of the
biggest State-owned enterprises, Sinopec expects to cooperate
with BOC in the long-term future."
The China Ocean Shipping (Group) Co (COSCO), one of the
world's largest shipping companies, has also received
remarkable benefits by cooperating with the bank.
"Our group wouldn't have become what it is today
without a partnership with BOC," said Wei Jiafu,
president and CEO of COSCO.
COSCO, founded in April 1966, has transformed from a
traditional Chinese State-owned enterprise into a globally
Wei said the value of integrity as a core principle for BOC
keeps customers loyal.
"Some groups may choose other banks to finance projects,
but COSCO would remain a partner with BOC, since the bank
caters to Chinese enterprises that are expanding
overseas," he said.
London and New York branches shining bright
Bank of China Ltd has established overseas branches in New
York and London, which sets a good model for other Chinese
lenders that are seeking to expand into the developed markets
and build up a strong reputation among its local clientele.
The bank set up a London office in November 1929, the first
foreign branch to be operated by a Chinese bank.
Later BOC expanded across the United Kingdom by establishing
offices in Birmingham, Manchester, Glasgow and Chinatown of
In the past eight decades, BOC remains a strong presence in
the city of global finance.
In September 2010, 300-plus employees of BOC London moved
into a new building that stands shoulder to shoulder with the
Bank of England that has a rich history of over 300 years and
located in the heart of London.
"The London branch has drawn a diverse customer base by
cultivating customers from local Chinese-ethnic communities
and businesses. The bank supports them through their UK
ventures," said Liu Xiaoming, Chinese ambassador to the
Employees of BOC London are hired mostly on a local level; as
90 percent of its workforce is British, many of them serve as
mid-level and senior managers.
With a solid business strategy, a small non-performing loans
ratio and sufficient liquidity, it survived the financial
crisis of 2008.
BOC has developed its retail and corporate banking businesses
all over Europe, attracting clients such as the ABB, British
Airways, Deutsche Lufthansa AG, and Rolls-Royce Motor.
Even though challenged by the gloomy economic situation in
the US and Europe, as well as the worsening euro debt
situation in 2011, the London branch realized a 35 percent
year-on-year growth rate with its international settlement
business, along with a capital volume standing at $17.2
billion by the end of October.
BOC is entering the credit market for crude oil trades, a
sector that has been monopolized by banks from the US and
Europe, while also providing other settlement services for
New York branch
Since the founding of the New York BOC branch in 1981, it has
been exploring the local market through establishing
sub-branches in the Chinatowns of New York in 1985 and in Los
Angeles in 1988.
The branch initially targeted local Chinese-ethnic
communities, Chinese institutions, small and medium-sized
enterprises and other investors, to facilitate trade between
China and the US.
In recent years, the branch focused on serving domestic
enterprises that intend to go global, as well as targeting
the mid and high-end markets.
Against the backdrop of the financial crisis, BOC adjusted
its business development strategy and expanded lending that
included enterprises that sought more liquidity.
During the financial turmoil, the branch ensured smooth
operations of the clearing system and security of all
financial transactions and payments. BOC stood out by holding
on to ample liquidity while the US market had been drained of
More notably, due to an increasing demand for settling trades
in the renminbi in 2009, the New York branch was the first
lender to launch a Chinese currency trading business in the
The branch is expected to become an offshore renminbi
business hub for the US in the upcoming years, while serving
as the main channel for Chinese financial institutions to
settle and clear dollar settlements.
By the end of 2011, total assets of BOC New York has
increased 11-fold from when it began operations, with net
profits rolling in at a faster pace each year.
It has already established relationships with major US
corporations listed on the "Fortune 500" list.
From China Daily 2012-06-26