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SCMP Reporter

HONG KONG Bank has five branches and four representative offices in China and has been invited to apply for a branch licence in Beijing, along with three other foreign banks.

  Its branches are in Shanghai, Shenzhen, Xiamen, Qingdao and Tianjin.

  The representative offices are in Guangzhou, Wuhan, Dalian and Beijing.

  Eddie Wang, the bank's chief executive officer, China, said branches were far more important commercially than representative offices but overall coverage was important.

   'Our customers have investment projects all over the place so, the wider the network, the more useful it is for our customers in terms of providing liaison services,' Mr Wang said.

  Branches are able to take deposits and lend, whereas representative offices are restricted to liaison activities.

  Shanghai is Hong Kong Bank's biggest China branch, with more than 140 staff, about half the bank's mainland total.

  'Our customers are overseas investors and state corporations. We process their export bills. We discount their bills and claim the investment from the overseas buyers through their banks.'   Mr Wang said the bank had noticed an increase in business from state corporations since last year, a trend he attributed to the fast service available through the bank's global network.

  Like other foreign banks in China, Hong Kong Bank is eagerly awaiting the chance to do business in yuan.

  The Chinese Government has said it will start trials, but has given no timetable.

  The recent credit squeeze in China had been particularly frustrating for foreign banks, Mr Wang said.

  Import-export and project finance business was the main area for foreign banks in China but other opportunities were becoming obvious, he said.

  'I would say credit card-acquiring business will be a huge market and foreign banks should not dismiss the business potential.'   Acquiring involves paying merchants and processing the paper work involved in credit card transactions.

  Mr Wang said credit cards and the securities would become an increasingly large part of banks' China business over the next few years.

  He said the market in China was becoming increasingly competitive. 'Everyone is trying to get the business. Sometimes, it is at the expense of income.'   Hong Kong Bank would continue to oversee its China operations from Hong Kong but more and more centralised functions would be done at the China branches, Mr Wang said.

  'Shanghai will be our computer hub so, for example, when funding needs to be secured from overseas, it will be much more economical if we ask Shanghai to do it rather than having every single branch doing it.'   Mr Wang said the bank would gradually introduce its in-house computer system, Hong Kong Bank Universal Banking System, into its China offices to replace the outdated system.

  'We put Shenzhen on to this system and it was found to be very useful. Shanghai was converted in late May.

  'It has become the centre of the system and we will be converting other offices over the next 18 months.' 



Branches hold key to doing business