We may have come to terms with China’s new found consumerism, but it still takes a little getting used to that even their nationally owned banks are making international headway.
It is no longer breaking news that China, the sleeping giant, has been awakened and is taking over the commercial jungle. But although we have come to terms with China’s new found consumerism, it still takes a little getting used to that even their nationally owned banks are making international headway.
Bank of China (BOC), China’s most international bank and one of the four state owned commercial banks, with an excess of 200 million clients and 220,000 employees, has won regulatory approval to operate a Swiss Private Bank and a Swiss Institutional Asset Management arm in Geneva. The group said in its Friday conference in Geneva on November 29th that it planned to start its operations immediately in ‘Quartier des Banques’ at 3 rue de General-Dufour, establishing BOC as the first Chinese bank to break into the Swiss market.
Started in 1912, BOC has a history of almost one hundred years. As early as 1929 it had already set up a London branch. The bank, which was the sole banking partner for the Beijing 2008 Olympic Games, now has 10,000 domestic operations and over 600 overseas, and is currently represented in 29 countries. The bank is not exclusively owned by the Chinese, though it is true that the state does have a majority stake of 70 per cent, the Royal Bank of Scotland also owns a significant 8.25 per cent stake via a subsidiary and UBS of Switzerland owns 1.33 per cent.
The move west for BOC started when on September 18th 2008 the group announced that it had acquired a 20 per cent stake in the French bank La Compaignie Financiere Edmond de Rothschild and described the acquisition as ‘the first strategic investment by a leading Chinese Bank in a euro zone bank.’
BOC also purchased 30 per cent of Geneva based Heritage Fund Management in late July, raising its stake to 70 per cent on November 20th after the Swiss Federal Banking Commission approved the BOC’s rights to operate in Switzerland. The Bank’s new Swiss units will thus be moulded out of the existing HFM structure. BOC (UK), a subsidiary of the Bank of China group, will be in charge of the new banking branch – Bank of China (Suisse) SA – offering first class services not only to Chinese clients seeking to park their assets overseas, but also to international ultra high net worth and very high net worth individuals.
Kenneth Ge, chairman Bank of China (Suisse) SA and CEO of BOC (UK), said that the group was able to recruit talented individuals thanks to the current financial turmoil. And so it would appear, as the team boasts with talent from the new CEO -Jacques Mechelany, MD and founding partner of HFM, to Daniel Penseyres founder of Bedrock Alternative Asset Management. The new Swiss branch promises to offer a well-developed network thanks to its team and the group’s strong presence in mainland China’ s principal financial centers, thus facilitating access not only into the EU, but also to the Chinese market and it products. Although BOC (Suisse) will be authorized and regulated by the Swiss Federal Banking Commission, it will still be able offer its clients real-time executions of orders in Hong Kong and China in the securities and currency markets.
BOC is used to breaking ground within the Chinese market: the bank was the first to issue bonds abroad, launch an international factoring service, and develop private banking. When discussing the new Geneva office, Keneth Ge stated “We are considering starting offices in other areas. Switzerland is just a start. Switzerland is the first but it will not be the last,”
Chinese GDP for 2007 was 7.1 Trillion dollars and the country boasted a little over 415,000 millionaires. One has to wonder how far the Asian invasion will reach in the next couple of years and how Bank of China’s new Swiss move will affect the European banking community.