Hong Kong Life leverages combined resources of partners to compete with larger rivals

Hong Kong Life, a joint venture life insurance company owned by five financial firms, is drawing particular takeover interest thanks to its business portfolio and bank branch network. Its corporate history can also illustrate how a group of smaller lenders can join hands to compete with bigger players.

Asia Financial Holdings president Bernard Chan pioneered the trend, calling upon 10 banks including his own to set up Bank Consortium Trust (BCT) in 1999 to introduce a Mandatory Provident Fund business when the pension scheme launched in 2000.

“That was sort of a defensive move for the 10 banks to get together to form the BCT Group to do MPF business. We knew our banking customers would need the MPF services and we had to provide the services for them. But then, each of us was too small to have the scale to do the business which is why we needed to get together,” he said.

The shareholder group initially comprised 10 banks but later consolidated to become eight. The current shareholders include Chan’s Asia Financial, Chong Hing Bank, Dah Sing Bank, Fubon Bank, ICBC (Asia), OCBC Wing Hang, Shanghai Commercial Bank and Wing Lung Bank.

BCT is now the sixth largest MPF provider in the city with a 6 per cent market share.

“By combining together, we have more than 330 branches in Hong Kong and we can share our back office for administration,” he said.

“When BCT was set up, it was right at the launch of the MPF, such that it was competing with all other MPF providers in a new market,” he said.