Bank relishes newfound license

We can enjoy greater lending and financing capacity, general manager says

The Industrial and Commercial Bank of China, the world's biggest bank, is getting new opportunities to make strides in London, the head of its London branch says.

The bank obtained a license for branch operations from the Prudential Regulatory Authority and Financial Conduct Authority, the British financial services regulators, in September, becoming the first Chinese mainland bank to obtain such a license in Britain since the founding of People's Republic of China.

"With the branch license we can enjoy greater lending and financing capacity proportionate to our parent company's balance sheet," says Chen Jin, general manager of ICBC London branch and managing director of ICBC (London) plc.

Subsidiary, on the other hand, is a locally incorporated bank in UK. In most cases the lending and financing capacity is proportionate to the balance sheet of the subsidiary itself.

The ICBC London branch will now focus on developing large wholesale business, Chen says, and ICBC (London) plc, the existing local subsidiary of the bank, will be primarily engaged in traditional commercial banking and focus on retail and business for small and medium-sized enterprises.

In recent years more and more Chinese companies have invested in Britain, where the dynamic international financial market holds many opportunities, Chen says.

"Our business also needs to go global."

Last year was marked by closer China-UK economic collaboration, and trade between the two was worth $80.9 billion (71.5 billion euros), 15.3 percent higher than in 2013. China's investment in Britain also grew sharply.

"The branch is crucial in ensuring the success of the bank's collaboration with its Chinese as well as local customers, and broaden our development space," Chen says.

With regulatory approval, the branch has gotten off to a good start expanding its business and customer services, and has laid a solid foundation for business development.

In October, ICBC London branch provided a 2.15 billion pound ($3.3 billion; 2.9 billion euros) syndicated revolving credit facility to Heathrow airport, as a mandated lead arranger together with other big international banks. It also provided 80 million pounds in credit support in favor of Lloyds of London, the first by a Chinese bank, on behalf of China Reinsurance.

Since these inaugural commitments, the London branch has entered into several other credit facilities for highly regarded customers, including Airbus Group, InterContinental Hotels Group and Jaguar Land Rover, further strengthening the bank's market profile in the important financial center London.

Moreover, the branch also arranged a 2 billion yuan cross-border financing deal by collaborating with the bank's domestic branches, allowing ICBC to further develop cross-border RMB business in London.

"Most of these transactions would not have been possible without the branch license," Chen says.

Chen believes ICBC's growth in London lays the foundation for the branch. ICBC established a representative office in the UK in 1995 and developed it into a subsidiary in 2003.

Chen, who has worked for ICBC for 20 years, has been a close observer of its internationalization. Earlier she worked in the international business department as a coordinator with the UK team at the bank's headquarters in Beijing before being posted to London last March.

"For the past 11 years, working as a subsidiary has allowed us to accumulate superior resources for our businesses in the UK,"Chen says. "Opening a new branch in London will allow us to strengthen our previously acquired advantages. Of course, one of those is being part of an already established, wide network of contacts, especially Chinese clients."

It is convenient for companies that need financial services to extend these businesses to the UK, she says.

"We're now looking forward to strengthening Chinese investment in the UK, supporting the strong economic ties between the two countries."

Chen talks about a virtuous cycle that on the one hand we follow our customers to extend financial services invested in UK and on the other hand an increasing number of Chinese enterprises feel encouraged and led to enter the British market "as Chinese banks establish and start operating within the UK. This is what I call an interactive, positive process of mutual promotion and mutual benefits."

She says ICBC has enough expertise and confidence to manage and operate business with branch and subsidiary licenses working together in Britain as ICBC has adequate similar experience of strategic structure with 'One team, Two licenses' in overseas expanding process.

By advancing its international operation strategy actively, ICBC has accelerated the layout of its overseas institutions and broadened the scope of business development in an effort to boost its global financial service capacities. Now the bank has more than 330 overseas institutions in 41 countries and regions.

In London, local government and many organizations are positively welcome and taking part in the RMB products and services.

London's efforts to become a European hub for offshore RMB activities began in September 2011 when the then Chinese vice-premier Wang Qishan welcomed private-sector initiatives for an offshore RMB market in London.

Since then, banks and other commercial institutions have rapidly developed RMB products and services, including RMB deposits, financing, foreign exchange trading and the issuance of dim sum bonds.

As well, the UK's central bank has established a RMB swap with China's central bank. Another big milestone last year was the UK government's issuance of a RMB bond, which became the first non-Chinese sovereign RMB bond.

ICBC is the bank of major RMB service provider not only in China but also in the world, Chen says, adding that the positive market and service environment in Britain has offered the bank much confidence.

Now the bank has about 100 employees in London, most of them recruited locally.

"The local team is very diverse, with both Chinese and staff from different countries and cultural backgrounds," Chen says.

"Combining different kinds of cultural resources is part of ICBC's enterprise culture, and we're determined to strike the right balance between our rules and the conventions of the London financial market."

"For ICBC's newly established branch in London, we're currently faced with the challenge of meeting our customers' expectations."

ICBC has also shown great commitment to forming working relationships with London's local community by joining the CitiUK, the China Enterprises Association, and the Association of Foreign Banks.

"We have even developed our own mobile app to serve our personal customers, both in Chinese and English," Chen says.

Before ICBC obtained its branch license, Bank of China Co Ltd was the only Chinese bank to have one in London. In December, China Construction Bank was also granted one.

With transnational corporations and British local banks competing against one another in the same market, many would expect some degree of competition to exist even among London's Chinese banks.

However, as an international financial center, London offers lots of opportunities for many banks, including China-based banks. Although competition exists between bank services, China-based banks have common interest, and they would like to share experience and communicate with each other during the process of development in the UK market.

ICBC's purchase of Standard Bank Plc has been finalized, and it will turn it into its overseas flagship for commodities, currencies and capital markets to serve customers in global financial markets.

Carlotta Clivio contributed to this story.

zhangchunyan@chinadaily.com.cn

(China Daily European Weekly 02/13/2015 page22)