Wealth Management Connect: lenders vying for US$700 million a year in fees in Greater Bay Area, Bank of China executive says
- Wealth Management Connect is the banking sector’s ‘next big driving force’ for fee-based income, says BOC Hong Kong executive Arnold Chow
- Bank of China’s combined branch network of almost 1,100 – the widest in Greater Bay Area – gives the group an edge in tapping the scheme benefits
The initiative will bring in a wide range of income, such as trading fees from selling investment products for clients, income from converting yuan into Hong Kong dollars and other currencies and charges for transferring money across the border, said Arnold Chow, deputy general manager for personal digital banking product department.
“According to our clients’ response, we found both mainland and Hong Kong investors have great interest to invest in the Wealth Management Connect scheme,” Chow said during a media briefing last week. “We expect the plan will be popular and it will be the next driving force for fee income for the banking sector.”
Chief Executive Carrie Lam Cheng Yuet-ngor said last week the scheme will be rolled out soon. Authorities on both sides of the border have set an aggregate quota of 300 billion yuan (US$46.5 billion) in fund movement in both directions. Each individual investor can invest up to one million yuan.
While HSBC and Standard Chartered have big branch networks in Hong Kong, the number of branches and customer base in the mainland Chinese cities are far less compared to BOC, said Louis Tse Ming-kwong, managing director of Wealthy Securities.
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The other Chinese banks also have huge branch networks in the mainland cities but they have a smaller presence in Hong Kong, which means the BOC Group is among the few banks with a big network on both sides of the border, he added.
“It appears BOCHK and its parent BOC working together are likely to be the big winners in the Wealth Management Connect scheme,” Tse said.
Chow said its Hong Kong clients are interested in mainland investment products which could deliver annual returns of between 3 and 5 per cent per year. Mainland residents are also keen to invest in Hong Kong investment fund products to diversify their risks and achieve higher returns, he added.
Chow expects the bank’s mutual funds, bonds and environment, social and governance-themed funds to be popular. Hong Kong has about 300 investment funds qualified to be sold to mainland investors.