ICBC widens its reach across Europe

Chinese bank now has branches in major cities and aims to benefit from Belt and Road opportunities

Industrial and Commercial Bank of China Ltd, the world's largest bank in terms of total assets, is making huge inroads in Europe, riding on the back of Chinese companies' rapid European growth and the renminbi's internationalization.

Since establishing a subsidiary in Luxembourg in 2006, the bank has expanded across Europe and now has branches in major cities including Paris, Amsterdam, Brussels, Milan, Rome, Madrid, Barcelona, Warsaw and Lisbon.

But its ambitions do not end there. Further internationalization of the renminbi as well as strategic opportunities created by China's Belt and Road Initiative will provide more opportunities for growth, says Chen Fei, chairman of ICBC Europe.

"The RMB's global use is growing fast, and at its foundation is the large size of China-related trade," he says. "ICBC Europe wants to make use of our parent company's large RMB capital advantage to provide our customers with yuan-related products and strategies."

The biggest customers for its renminbi services, which include clearing and trade finance, are Chinese companies expanding internationally, multinationals in Europe and leading European companies, he adds.

In 2014, ICBC Luxembourg was made the country's official clearing bank, which creates direct clearing in cooperation with the Chinese central bank, and facilitates better clearing and settlement for Luxembourg's offshore RMB services.

Meanwhile, ICBC sees the Belt and Road Initiative, which comprises major infrastructure projects to better connect Asia with Europe, Africa and the Middle East, as a major opportunity for the bank to support Chinese companies going global and finance these infrastructure investments.

Chen says his team can provide companies with financing services such as borrowing, trade financing and investment banking, as well as personal banking like currency exchange and money transfers. He says new products will also be launched to reduce the currency risks for clients.

"Overall, the Belt and Road Initiative will help Chinese financial companies to internationalize further, and it helps us at ICBC Europe to realize our goal of becoming a mainstream foreign bank in Europe," the chairman says.

In October, ICBC Europe became China's first EU-registered bank to enter Europe's investment fund industry after gaining approval from the Luxembourg regulators to launch a UCITS to invest in China's onshore bond market. UCITS, which stands for undertakings for collective investments in transferable securities, provides a single European regulatory framework for an investment vehicle, which means the vehicle can be marketed across the European Union regardless of country it is based in.

Then, in December, ICBC Europe was granted a renminbi qualified foreign institutional investor quota of 4 billion yuan, which allows the bank to invest in the Chinese mainland's debt and equity markets. Shortly after, ICBC Europe launched the ICBC Credit Suisse S&P China 500 Index Fund, which aims to help European investors access China's stock market.

Chen says that although ICBC Europe's core activities are mainly focused in traditional commercial banking, it is strategically expanding its activities to investment banking, personal banking, asset management, global cash management and renminbi-related services.

Chen says ICBC Europe's development has rested on six major advantages: its team, its customers, the image and support of its parent company, market opportunities, and the Chinese government's policy direction.

ICBC Group's image is seen as competitively strong, while the head office in China has provided crucial support to the European operation, he explains. "Our parent company has continued to support us in our business activities, ranging from sharing customer services, capital lending, research and development of new products, human resources and policy support."

Chen says he is optimistic about the future of ICBC Europe, particularly due to the opportunities being created by Chinese government policy.

"China's capital account controls are quickly liberalizing, so many more opportunities exist for Chinese companies going global, Chinese private-sector participation in overseas capital markets, financing through onshore guarantees for offshore loans, and cross-border capital account management. These all point to a new stage of rapid development for us," he says, adding that the increasing integration of China and overseas financial markets will create new customer groups, giving ICBC Europe fresh incentive to develop suitable financial products.

cecily.liu@mail.chinadailyuk.com

(China Daily European Weekly 01/15/2016 page28)