The Bank of East Asia (BEA) is talking with two mainland banks with a view to forging a co-operative alliance, according to chairman and chief executive David Li Kwok-po. Speaking after a lunchtime address to the Hong Kong Institute of Bankers, Mr Li said BEA was hoping to expand its mainland presence, which at present was through 17 representative offices and branches. 'Last week, I was in Beijing and had the privilege and honour of meeting with governor Dai Xianglong of the People's Bank of China,' said Mr Li. 'I told him how keen I was to expand my operation in mainland China, and now we are talking to two mainland banks about co-operating with them. 'They are very interested in our Internet banking and they want our product and we are thinking of distributing our product through them and then getting some benefit out of it.' Mr Li said that for the proposed venture to work there would have to be regulatory reform. 'But we are talking with the authorities and we hope to be among the first to do such a venture on the mainland,' he said. Earlier, Mr Li told the lunch meeting that the mainland's accession to the World Trade Organisation and the associated reform of the finance sector presented an ideal opportunity for joint-venture partnerships. 'Together, Hong Kong and mainland banks can create a powerful alliance.' Among the advantages of collaboration, he said, was the opportunity to expand BEA's branch network in strategic cities and win increased market share. 'Secondly, we can operate more efficiently by sharing local distribution networks, such as the ATM systems in China. And thirdly, we should have the opportunity to introduce yuan products, especially designed for Chinese markets, such as consumer loans and credit cards.' Mainland partners, in turn, could benefit from the expertise and experience BEA could offer in management, marketing, investment banking, corporate finance and foreign exchange services. BEA would foster a closer working relationship with the mainland banks by relocating senior executives there, where they would work alongside local managers, said Mr Li. 'We will also make use of our training centres in Shenzhen and Shanghai to provide more training opportunities for all our colleagues in the mainland as well as those in Hong Kong.' Mr Li expected the opening of the banking market to result in a dramatic increase in demand for loans and investment. In the circumstances, the banking system would have to be supported by solid legal and accounting structures, he said, as well as by risk assessment measures.
