AT 46 years old, Liu Chong Hing Bank has decided to leave its parent, although family ties will remain strong. The announcement last week that the bank will be spun off in a separate listing from Liu Chong Hing Investment - a move expected to raise about $1 billion - is aimed at strengthening the bank's capital base. The Liu family is likely to remain very much in control of the operation, as it has with all its business enterprises. The low-profile family originated from Chiuyeung in Guangdong province and, like many Chiu Chow people, the Lius run their business along strong family lines. The bank was established by Liu Bo-shan, who started a godown business in Hong Kong in the 1940s and diversified into property and banking sectors. Liu Bo-shan has several sons who now handle the company. Liu Lit-chi is handling the listing application for the banking arm. Liu Lit-man is current chairman of Liu Chong Hing Investment. He explained the group had grown to such an extent that further expansion by spinning off its banking arm would make good business sense and provide more capital to the bank. Many existing shareholders wanted to hold the bank's shares as well, he added. Like many other traditional and conservative Chinese banks, Liu Chong Hing Bank experienced a difficult time during the banking crisis driven by social unrest and a property slump in the mid-1960s. Japanese-based Mitsubishi Bank acquired a 25 per cent stake in Liu Chong Hing in 1973, but Mr Liu emphasised that the Mitsubishi Bank link-up had nothing to do with the bank runs in the 1960s. ''In the 1970s, foreign banks were not allowed to open branches here, so there were many foreign banks taking up shares from the local Chinese banks,'' he said. However, unlike some local Chinese banks which have been taken over by foreign and mainland Chinese banks, the Liu family still holds a controlling stake in the group. Looking ahead, Mr Liu believed that the banking sector would enjoy a good year, as the United States had renewed China's Most Favoured Nation status and the airport negotiations had taken an optimistic turn. ''As a result, we anticipate demand for loans will increase a lot this year,'' he said. After spinning off the bank, the major business of Liu Chong Hing Investment will focus on property. Executive director Nam Lei-yik expects the company to earn about $200 million rental income annually. Mr Nam said the company was looking at certain property projects in Shanghai and Guangzhou. But the property owned by the banking arm will not go to the holding company, according to Mr Nam. Currently, 22 out of Liu Chong Hing Bank's 31 branches are the group's own property. On the banking side, the bank will open two more branches in Hong Kong in the next 12 months. Mr Nam stressed that the bank wanted to open a branch in Shanghai as the city was becoming a major financial centre in the mainland. At the moment, Liu Chong Hing has an office in Shanghai and a branch in Guangdong. On disclosure of inner reserves, Mr Nam said Liu Chong Hing Bank had no objection to doing it step by step since greater disclosure was a trend in world banking.
