Foreign banks face regulatory headache in China mergers
As OCBC finds out, global players operating in China need to go through a long and opaque regulatory process of rebranding after a tie-up
It might be a rare occurrence now, but when two foreign banks with mainland branches merge, the process is guaranteed to be a sticky one.
Oversea-Chinese Banking Corp is finding that out as it waits for mainland regulators to let it rebrand with a recently acquired Hong Kong lender.
The mainland's banking law says foreign lenders can have only one subsidiary. That requires banks that merge to come under one banking licence and one brand. However, to do that, they must apply to the mainland's banking regulator and then work through an opaque regulatory process that takes far longer to complete than in other jurisdictions.
In late July, Singapore-based OCBC bought a controlling stake of Wing Hang Bank, a Hong Kong lender. Wing Hang was delisted from the Hong Kong stock exchange and on October 1 it was rebranded as OCBC Wing Hang Bank in Hong Kong and Macau.
The mainland operations of OCBC and Wing Hang are still separate brands and OCBC has not released a date for when the banks will be rebranded. In a press release in August, the bank said only that rebranding would take place at a later stage.
OCBC has 120 branches and offices across Hong Kong, Macau, Taiwan and the mainland. Its presence on the mainland was limited to 16 branches and sub-branches before the Wing Hang buyout. The deal brought under its control 15 more branches and sub-branches, most of which in the Pearl River Delta.
Executives at OCBC Wing Hang declined to comment on the approval process it was going through with the China Banking Regulatory Commission.