ICBC Standard Bank sticks with London expansion to tap Chinese demand despite Brexit

‘One Belt, One Road’ and weak pound trigger growing interest among Chinese firms to trade in forex and metals in London

PUBLISHED : Monday, 21 November, 2016, 10:23pm
UPDATED : Monday, 21 November, 2016, 11:02pm

Lured by the strong demand from Chinese companies to trade in the foreign-exchange and commodities markets and the opportunities arising from the “One Belt, One Road” projects, ICBC Standard Bank is determined to proceed with its expansion in London despite Britain’s vote to leave the European Union, according to a senior executive.

Established in 2014 and headquartered in London with offices in Hong Kong, Singapore and Shanghai, the bank is a joint venture between Industrial and Commercial Bank of China, with a 60 per cent stake, and South Africa-based Standard Bank.

ICBC buys 60 pc of Standard Bank's markets unit

With a staff count of 700, the firm provides investment banking services for both ICBC’s and other Western clients in the trading of commodities, foreign-exchange, interest rate, credit and equity products. It is also a member of the London Metal Exchange in metal trading.

ICBC itself also has a branch network in London and across Europe on corporate banking.

Jinny Yan, chief China economist of ICBC Standard Bank, said her firm would continue to expand in London.

“London has always been an important trading centre for foreign exchange and commodities, which will not be affected by the Brexit referendum result. Many of our Chinese clients have a strong demand for trading in foreign currencies, precious metals, base metals and vaulting services in the city,” Yan told the South China Morning Post.

ICBC Standard Bank hoped the British government would continue to make sure it is easy for foreign lenders to do business in the country, she said.

Yan also said Brexit might encourage the government to further expand its trade links with emerging markets such as China and many African countries, which would boost the demand for the bank’s services.

These firms will not leave London completely as other European cities do not have the financial infrastructure like London’s
Neville Hill, managing director and head of European economics, Credit Suisse

She is confident that London will not be easily replaced by other European cities due to its time zone, language and large pool of lawyers and accountants to serve Chinese companies.

“The weak pound has made many Chinese companies consider it is the right time to invest in Britain as many assets look cheap,” she added.

Yan believes ICBC Standard Bank will gain from Beijing’s “One Belt, One Road” initiative to promote trade by linking 60 countries across Asia, the Middle East and Europe through investments in infrastructure projects.

“We have trading services in the currencies of all these 60 countries and hence can provide foreign-exchange and credit services to the Chinese companies that invest in these ‘One Belt, One Road’ projects,” she said.

ICBC Standard Bank is among the Chinese players that keep expanding in London at a time when their Western peers are planning to scale down their operations there.

Neville Hill, managing director and head of European economics at Credit Suisse, said Brexit would mean many financial firms would scale down their investments in London.

“Some banks and asset management companies may scale down their headcounts and operations in London and shift more resources to expand in other European cities after Brexit. This will be a slow process but that would still affect the economic growth in Britain,” he said.

“However, these firms will not leave London completely as other European cities do not have the financial infrastructure like London’s. London has the rule of law, talent pool and ecosystems that cannot be found in other markets.”