Bank of China 'riding a wave' to realize global ambition

London branch plays an important role as business benefits from RMB internationalization, economic integration

Bank of China Ltd, one of the nation's Big Four banks, aims to become a leading global player by offering suitable products and building customer relations while maintaining its socially responsible values, according to a senior executive.

At the heart of this global vision is the bank's London branch, due to both its long history and the city's vibrant and international banking scene, says Sun Yu, general manager of the branch.

He says the goal is become the No 1 choice for all China-related activities in the United Kingdom, with plans to make London an important hub for the bank's activities in Europe, the Middle East and Africa.

China's high economic growth, financial market liberalization and renminbi internationalization have created a unique opportunity for Chinese banks to grow in the British capital, Sun says.

"London's financial community has given Bank of China much respect and attention, as we are a bridge between opportunities in China's financial sector and the global market. We're riding a giant wave, but we must make the most of it."

Sun emphasizes that the city's high concentration of international financial institutions and investors, highly developed banking and support sector infrastructure and high liquidity have contributed to the bank's strategic positioning of London as a hub, even in light of Britain's decision to leave the European Union.

"London's status as a leading global financial center will not immediately be changed by Brexit. The impact of Brexit still remains to be seen, so our strategy is to carry on with business as usual while keeping a close eye on the UK-EU negotiations and policy announcements."

He was speaking at his office in the City of London, not far from the Bank of England, which the branch moved into in 2010.

Sun says Bank of China is not just a commercial entity focusing on making profit, but through interaction with London's banking community and regulators, it is a catalyst for stronger links with China.

He sits on the boards of the Association of Foreign Banks and the International Capital Market Association, which he helps to connect with China's National Association of Financial Market Institutional Investors. He is also the only Asian representative among the 13-member Prudential Regulation Authority Practitioners Panel.

In addition, Bank of China is a key member of a City of London working group to promote offshore RMB activities and works closely with UK Trade and Investment, a government agency, to connect British and Chinese small and medium-sized enterprises.

Sun says the initiatives fit with the Chinese bank's strong focus to be socially responsible across all sectors.

As a profit-driven entity, however, he says the bank is also looking to make breakthroughs with its products and services, leveraging the opportunities provided by RMB internationalization to establish a solid foundation and compete with leading Western banks.

The bank is already active in China's interbank bond market and stock market, and the London branch can focus on creating products that enable Western investors to access China's onshore activities as financial markets open up, Sun says.

Founded in Beijing in 1912, Bank of China became the first Chinese bank overseas when it opened an agency office in London in 1929. Seventeen years later, the office was made into a branch, and over time the bank has established subsidiaries in London's Chinatown, Manchester, Glasgow and Birmingham.

In the early days, the bank focused on traditional banking business such as opening accounts, lending and trade financing, but in recent years its activities have been broadened to include large-scale investment financing, RMB bond issuance and sales, cross-border RMB clearing, and investment advice for high net worth individuals.

Sun says as the RMB becomes more international, Bank of China will focus on collaborating with European partners to create platforms where RMB products and services can be exchanged and traded.

"This is a big challenge, because instead of adding a mature currency to existing platforms, as Western banks are doing, we're using RMB as an opportunity to create new platforms for transactions," he says. "We can benefit from the first-mover advantage in European markets."

An extra challenge for his team is to convert and adapt existing onshore financial products to suit London's investment market, he says. China's financial system has extensive government controls, whereas London is private-sector driven and demands more-sophisticated products.

Sun says examples of the new platforms to boost RMB internationalization include investments in infrastructure projects, such as the Belt and Road Initiative, and green finance.

Bank of China is already involved in financing projects along the Belt and Road, which aims to improve connectivity between Asia, the Middle East, Europe and Africa. The bank has said it will commit 100 billion yuan ($15.4 billion; 13.6 billion euros) over the three years to support the initiative.

During the G20 Summit in Hangzhou, the bank also announced it will pioneer the issuance of green bonds offshore to finance environmentally friendly and sustainable projects in China, giving Western investors direct access to opportunities across the nation.

Sun says the potential opportunities from RMB internationalization are enormous, especially with the currency to be included in the International Monetary Fund's special drawing rights basket on Oct 1.

This milestone, he says, will increase the desire among overseas financial institutions to increase long-term holding of RMB equity and fixed-income products, adding that the Chinese government has already unveiled initiatives to increase foreign access to onshore RMB products.

Bank of China is involved in this process, too. In April, it held a roadshow in London to promote investment in China's interbank bond market, which attracted a lot of interest, Sun adds.

In addition to its own products, the London branch also sells other flagship products. In June, when China's Finance Ministry issued 3 billion yuan in bonds in London, the branch was a joint global coordinator along with HSBC.

"We want to gain an edge in London through RMB products and then extend our expertise to non-RMB products," Sun says. "At the same time, we also want to improve our internal management, by creating the best platform for our employees, to create the foundations for a globally competitive bank."

The bank has about 500 employees. Of the 90 percent hired locally, about 60 percent are ethnic Chinese.

Sun says the London branch integrates Eastern and Western cultures, respecting local etiquette, rules and regulations while also valuing Chinese heritage.

That integration is perhaps best seen in the London office's canteen, where Chinese and Western employees sit together to eat a range of cuisines, from Chinese dumplings to fish and chips.

From a management perspective, he says he encourages employees to learn from each other and to maximize their language and cultural advantages while working as a team.

"We want to be a local bank for our customers, but we want to leverage our Chinese background and resources," he adds. "We want to grow into a global bank by riding the wave created by China's economic integration with the world, and we'd like to stay true to our core values and historical roots."

cecily.liu@chinadaily.com.cn

(China Daily Africa Weekly 09/09/2016 page30)