Standard Chartered's new Hong Kong chief May Tan eyes China growth
Lender's first female chief executive in Hong Kong outlines her vision for growth driven by mainland economy and its developing capital markets
Finding fresh revenue growth externally through its solid corporate and commercial banking roots in Hong Kong ranks as the top priority on the to-do list of Standard Chartered's first female chief executive in Hong Kong.
In an interview, she laid out her vision for the future, highlighting opportunities in the mainland's nascent capital markets and fast-growing yuan business as the engines of profit, since trading conditions in financial markets have been tough.
The mainland economy and its developing capital market offered lots of new business for the bank in both equity and bond offerings, said Tan, who gained a wealth of knowledge about regional financial markets as Cazenove's Asia chief for more than a decade from 1993.
In a gradual shift to an advice-driven, fee-based model, Tan said new business from medium-sized initial public offerings of mainland firms, the rollout of preference shares and the undeveloped bond market in Hong Kong seemed the most promising given the bank's strong network of corporate clients.
"My experience in capital markets helps me understand the dynamics and client needs better," said Tan, who orchestrated a successful integration between the commercial bank and equity broker in 2008 when the collapse of Lehman Brothers almost brought down the global financial system.
"It was an honourable deal since Standard Chartered did not change its bid price for Cazenove even after the Lehman crisis," said Tan, who managed 200 regional staff for the broker.
Despite her optimism in capital markets, the London-headquartered group warned earlier that its first-half operating profit could fall 20 per cent, blaming difficult trading conditions in financial markets.
Second-quarter results from US banking giants JP Morgan and Goldman Sachs showed lower trading revenue in both their equities and fixed-income, currency and commodities units, sending a clear message to executives that the landscape remains challenging.
Tan, who reports to Benjamin Hung, Standard Chartered's chief executive for the greater China region, said its yuan business had been an unexpected beneficiary of the Foreign Account Tax Compliance Act (Fatca), a US law intended to detect and deter tax evasion by US citizens holding bank accounts overseas.
"In bilateral trade activities, renminbi has emerged as the preferred currency, especially when settlement in the Chinese currency avoids burdensome reporting from Fatca," she said.
Mainland companies that needed to switch to trades settled in yuan and hedge their yuan exposure amid rising volatility were seen as one of the next growth points in yuan business, the bank said earlier.
The People's Bank of China has abolished almost all restrictions on capital flow under the current account since announcing a yuan trade pilot scheme in 2010. Trade settlements in yuan have since jumped from 2 per cent of the mainland's trade to 20 per cent.
In the first six months of this year, Standard Chartered ranked second to HSBC in the league table for offshore yuan bonds, raising 40.1 billion yuan (HK$50 billion) in 126 deals, according to Thomson Reuters. The bank dropped one notch to sixth in the Asian G3 currency bond market for Asia ex-Japan region, raising US$6.4 billion in 43 transactions.
