Mainland operations unaffected

Updated: 2008-09-25 07:52

By Wang Zhenghua(HK Edition)

  Print Mail Large Medium  Small 分享按钮 0

SHANGHAI: Business of the Bank of East Asia (BEA) on the mainland remained unaffected as the bank rolled out emergency plans following widespread rumors concerning the stability of its parent company in Hong Kong, Sun Minjie, executive vice-president of the bank's mainland subsidiary said yesterday.

He reiterated that the mainland branch is ready to support its parent in Hong Kong when necessary.

"There are no signs of irregular cash withdrawal (on the mainland) and we have adequate liquidity," he told China Daily in a telephone interview yesterday. "I hope the rumor (in Hong Kong) would come to an end soon."

He also said the bank has been fully prepared.

"We have enhanced temporary liquidity and have a bigger cash flow ready," Sun said. "The bank's management is fully prepared for any disruptions. Our staff have been instructed on how to communicate effectively with inquiring customers."

The Hong Kong lender, also one of the first overseas banks to establish a locally incorporated entity on the mainland, celebrated the opening of The Bank of East Asia (China) Limited last April.

Presently, BEA China has a network of 57 outlets that include 17 branches and 39 sub-branches across the mainland. It plans to add about 20 outlets and at least 1,200 staff on the mainland, where the bank derived almost a quarter of its profit last year.

Overseas banks are required to incorporate locally when doing renminbi retail business to minimize risks for mainland customers and subject themselves to supervision by mainland authorities. The China Banking Regulatory Commission (CBRC) also urged locally-incorporated overseas banks to build a so-called Chinese Wall separating themselves from parent banks and remaining mainland branches.

They should set up independent risk control, accounting and IT systems to prevent overseas risk overflow.

"The mainland subsidiary and Hong Kong headquarters are like two children by a mother. They will help each other overcome difficulties." Sun said yesterday, declining to comment further.

Because of their investment in troubled financial institutions in the US, a number of mainland banks have been affected by the Wall Street financial turmoil.

But an official with BEA China said earlier this week none of the lender's wealth management products are linked to US investment bank Lehman Brothers and won't be affected by the company's bankruptcy.

Also, despite the fact that some of its products are related to Merrill Lynch, they would remain intact because the troubled US firm has been bought by Bank of America, which has high credit ratings, the official said.

(HK Edition 09/25/2008 page2)