CCB set to integrate its HK operations

China Construction Bank is planning to integrate its operations in Hong Kong by merging China Construction Bank Asia and CCB's Hong Kong branch, as part of a plan to boost overseas business and avoid internal competition.

'We hope to maintain the brand of CCB Asia,' CCB president Zhang Jianguo confirmed with the Post yesterday, adding that the parent bank hoped CCB Asia would develop into a bank with fully fledged commercial banking business.

CCB, the mainland's second largest bank by assets, has been expanding in recent years, setting up two to three offshore outlets every year. It was believed to be hoping that its Hong Kong operation could blaze a trial and nurture talent for future international expansion.

Zhang said the main purpose of the merger was to restructure and consolidate mid-back office operations, save resources and avoid internal competition. He said major layoffs were unlikely.

Its Hong Kong branch was the bank's first offshore foray, with a focus on wholesale banking. CCB Asia, which has about 2,000 staff, is a wholly owned subsidiary but has concentrated more on retail banking since acquiring Bank of America's Hong Kong retail operations in 2006.

Zhang said the bank had drafted and discussed the plans and was applying for regulatory approval.

CCB's top management set out an overseas expansion blueprint in 2006.

'Our future overseas strategy is to mainly grow organically, but also capture good acquisition opportunities,' Zhang said recently, adding that the bank was pushing for expansion in Moscow, Canada and Dubai this year.

CCB Asia has 41 branches and one private banking centre in Hong Kong. Its wholly owned subsidiary China Construction Bank (Macau) has eight branches.

Wang Hongzhang, who recently took over the chairmanship of CCB, also said yesterday at the bank's AGM that the bank would slightly adjust loan extension criteria, extending more credit to those with less risk, and that there was strong loan demand in China's western regions.

Wang said CCB was in full compliance with so-called Basel III, international standards set up to regulate banks' capital and liquidity.

He said he expected loan growth to remain stable as China's economy was expected to pick up in the second half.

Pang Xiusheng, CCB executive vice-president, said it would be hard to maintain the past few years' fee income growth of 30 to 50 per cent, but the bank would still push ahead to develop this business.

On wealth management products, the bank said even though issuing such products would increase costs, it helped to retain customers. For every 100 billion yuan of new products issued, costs would rise about 2 billion yuan, Zhang said.

Outstanding wealth management products rose about 14 per cent to nearly 800 billion yuan by the end of April from the end of last year.

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CCB Asia has this many branches and one private banking centre in Hong Kong. China Construction Bank (Macau) has eight branches