Bank of China Hong Kong (BOCHK) has pinpointed private banking as a key strategic focus, and is in midst of a regional expansion drive that includes the acquisition of multiple ASEAN businesses from its parent company, Asian Private Banker can reveal.
Since the first half of this year, BOCHK has been actively acquiring Bank of China’s (BOC) branch and sub-branch network in six ASEAN countries — Singapore, Thailand, Malaysia, Cambodia, Vietnam and the Philippines — using funds from the HK$68 billion sale of subsidiary Nan Yang Commercial Bank to China Cinda Asset Management.
Accordingly, BOCHK will undergo a wholesale transformation from a local to regional player – and the private bank is earmarked to be a beneficiary of this expansion.
Potential for most powerful wealth network
“[Our] private banking business will be one of the Group’s key strategic focuses in [the Group’s] regional expansion plan, taking advantage of the growing affluence in the Southeast Asian region,” the bank tells Asian Private Banker in an exclusive statement.
“We will establish a regional platform targeting mid-to-high-end clients and strive to become the private banking centre for Bank of China Group’s overseas regions.”
BOCHK Private Banking has some way to go before it cracks the upper echelons of Asia’s offshore private banking industry — currently, it does not rank among Asian Private Banker’s Top 20 private banks in the region by AUM — but by leveraging off its newly acquired branches, it has the opportunity to become one of the most networked and powerful wealth managers in Asia.
To be sure, rival regional wealth managers, such as DBS Private Bank and Bank of Singapore, have deeper roots and, arguably, enjoy a greater brand awareness in Southeast Asia; in China, however, their presence pales in comparison to BOC’s reach. Presently, the Chinese lender is the fourth largest bank in the world by assets, according to S&P Global Market Intelligence data.
The potential for BOCHK to establish itself as a powerhouse in Northeast and Southeast Asia will be a matter of envy for many rival players that typically skew towards one of the two major booking centres in Asia.
“Endeavouring to provide one-stop banking services, we aim to become the most preferred brand for overseas Chinese, and the first choice for cross-border high-end customers,” the bank adds in its communication with Asian Private Banker, highlighting the offshore Sino network as a key focus.
“We will expand our business through a series of client acquisition and referral activities by close collaboration with BOC Group’s overseas entities. We have been making good progress as reflected in the encouraging growth of our private banking clients and their assets under management.”
Late last year, BOCHK’s general manager of private banking, Wendy Tsang, said that the bank aims to boost its AUM to US$60-70 billion, thereby catapulting it into the region’s top 10 by client assets. Tsang also outlined plans to hire an additional 200 employees.
Capturing national opportunities
In a recent annual general meeting, vice chairman and chief executive of BOCHK, Yue Yi, unveiled the bank’s regional plans when investors demanded clarity on how BOCHK would put to use the proceeds from the sale of its holdings in Nanyang Commercial Bank, which resulted in HK$30 billion in profits.
Yue pointed towards a number of growth opportunities, including taking on One Belt One Road-related financing projects, exploiting the lender’s position as a leading yuan player and raising its client servicing standards.
“Going forward, we hope to bolster our service levels for corporates and private wealth management customers,” Yue said in June this year.
The bank has since confirmed these ambitions to Asian Private Banker: “To capture the opportunities arising from the national initiatives such as the Belt and Road, Mainland enterprises going global, and RMB internationalisation, [BOCHK] has pushed forward its plan to transform from a local bank into a regional bank by establishing presence the ASEAN region.”
Industry-wide SEA foray
High net worth wealth in the six Southeast Asian nations where BOCHK will acquire it’s parent’s businesses exceeds US$1 trillion.
BOCHK will inevitably cross paths with other global competitors that have been actively plugging into the region’s wealth pool, whether by setting up onshore units or establishing strategic relationships with local financial service providers.
In May this year, Credit Suisse launched an onshore wealth management operation in Thailand to target (U)HNWIs. Its Bangkok-based team is supported by more than 200 Singapore-based products and solutions specialists.
In late 2014, Lombard Odier extended its regional reach in a strategic tie-up with Thai lender, Kasikorn Bank. Similarly, Bordier & Cie was reportedly speaking to at least three regional institutions about establishing strategic partnerships in onshore markets including Vietnam.