PrimeCredit to serve as StanChart blueprint
Standard Chartered Bank will use its latest Hong Kong acquisition as a blueprint for the development of lower-end consumer finance businesses in other developing markets, according to director Peter Wong Tung-shun.
Mr Wong said that by acquiring PrimeCredit, the bank had established a presence in a market segment in which it simply 'did not have any knowledge' previously.
'They have a totally different group of customers from ours,' said Mr Wong. 'We look at PrimeCredit's technology, credit scoring system, risk management and customer group and think it has a lot of potential.'
Besides developing PrimeCredit's lending business in Hong Kong, a key factor behind the acquisition was a plan to adopt the same business model for the group's operations in other countries.
The bank spent $980 million in June acquiring the local personal loan specialist, thought of as being one of the best-managed lenders in the low-end consumer finance market.
Unlike Standard Chartered's previous acquisition Manhattan Card, PrimeCredit will operate as a separate entity.
Despite the acquisition, Mr Wong cautioned against undue optimism over Hong Kong's credit market, saying that loan growth was likely to stay weak for at least another six months.
'Despite the economic recovery, the consumer mentality hasn't changed much yet,' Mr Wong said. 'They are still using their credit cards but normally repay their balance very quickly. There is no revolving lending.'
Nevertheless, he remained confident that loan demand would pick up gradually, assuming the United States economy and Hong Kong's tourism industry remained strong.
Mr Wong also reiterated Standard Chartered's determination to find a suitable joint-venture partner in the mainland, saying that organic growth to expand its business across the border was 'not possible' in such a large country.
