New | Chong Hing Bank gears up for push into China
HK lender poaches leading bankers as it shifts focus to Guangzhou
Chong Hing Bank, a Hong Kong institution, is set to incorporate itself in China as it shifts its gaze to Guangzhou.
The move comes after Yuexiu Holdings, Guangdong province's government investment arm, bought a 75 per cent stake in the bank last year.
With the newfound backing of the Guangdong State-owned Assets Supervision and Administration Commission as a result of its Yuexiu connection and its parent's near-sovereign credit, Chong Hing is flush with capital raised from last year's stake sale. In a gradual shift in orientation, it has been expanding lending to state-owned enterprises and poaching high-flying Chinese bankers and former regulators.
The bank has snapped up Zong Jiaxin, who was the second-in-command at ICBC Asia, to spearhead its China entry. Zong has rich regulatory experience and relationships as a result of his tenure at ICBC in Beijing and Shenzhen. Zong has brought in with him senior bankers from top Chonese lenders who will work with him on building up the branch network in Guangdong.
Beijing, Shanghai, Shenzhen each has its own home champions to cater for its provincial and city-level business interests. "Guangzhou has never had a bank that looks the part," said Margaret Leung Ko May-yee, Chong Hing vice-chairwoman, who announced the makeover plan on Tuesday.
The bank has submitted applications for branch expansions and is waiting it out to fulfil the China Banking Regulatory Commission's minimum operational experience requirement before it can receive local incorporation status.
Despite the strong Chinese government support and sticky funding from loyal depositors in Hong Kong, Leung admitted the bank faces limitations in pursuing yuan business.
Unlike Hong Kong peers that have aggressively expanded in China, the bank is unconstrained by bad debt or capital. Impaired loan ratio at the bank stands at just 0.05 per cent. It is also on track to raise HK$3.4 billion through a rights issue to fund its mainland expansion, with most of the funds coming from Yuexiu.
Leung, who was brought in to oversee Chong Hing's makeover after retiring from a career with HSBC and Hang Seng following Yuexiu's acquisition, has given herself three years to fulfil the task. She aims to take Chong Hing to the mid-tier league by the time her contract expires in 2017.
Chong Hing Bank was founded as Liu Chong Hing Saving Bank in 1948 by Liu Po Shan, a merchant from Guangdong. Liu made his fortune from land and gold speculation after arriving in Hong Kong in the 1940s.
He built the bank and used proceeds from deposits to finance redevelopment of the western part of Hong Kong Island by turning colonial godowns and power plants in the Kennedy Town area into residential houses. Liu died in 1961.
His descendants ran the bank, funding Hong Kong businesses during the economic miracles from the 1960s to the 1990s.
