For­eign banks to reap re­form div­i­dend

China Daily (Hong Kong) - - BUSINESS - By JIANG XUEQING jiangx­ue­[email protected]­nadaily.com.cn

China is “very ac­tive and se­ri­ous” about fur­ther open­ing up its fi­nan­cial sec­tor, and this will bring huge busi­ness op­por­tu­ni­ties to for­eign banks in the coun­try, said Pei Yi­gen, ex­ec­u­tive vice-pres­i­dent of Citibank (China) Co Ltd.

“Com­pared with the poli­cies al­low­ing for­eign banks to set up branches in China, in ad­di­tion to wholly owned sub­sidiaries and joint-ven­ture banks, or re­move caps on for­eign own­er­ship in Chi­nese fi­nan­cial in­sti­tu­tions, we pay higher at­ten­tion to the poli­cies that ex­pand the busi­ness scope of for­eign banks,” he said.

Citi China re­ceived a li­cense from the China Fi­nan­cial Fu­tures Ex­change in June to act as a fu­tures mar­gin de­pos­i­tory bank for its client in the China fu­tures mar­ket.

“This type of li­cense al­lows us to pro­vide ba­sic ser­vices for non-bank fi­nan­cial in­sti­tu­tions. We hope to be able to ob­tain more li­censes of such kind,” said Pei, who is also a man­ag­ing di­rec­tor and coun­try head of Citi trea­sury and trade so­lu­tions in China.

“We also look for­ward to par­tic­i­pat­ing more in pi­lot pro­grams that en­cour­age fi­nan­cial in­no­va­tion, along with our Chi­nese coun­ter­parts. We hope to take the op­por­tu­nity of China’s re­form and openingup to in­tro­duce our ad­vanced ex­pe­ri­ence over­seas to the coun­try through pi­lot pro­grams, so as to ben­e­fit the real econ­omy and play a sub­stan­tive role in the im­prove­ment of China’s fi­nan­cial mar­kets,” he added.

Through fa­cil­i­tat­ing more for­eign par­tic­i­pa­tion in the fi­nan­cial sys­tem and cre­at­ing a level play­ing field for for­eign fi­nan­cial in­sti­tu­tions, China’s cap­i­tal mar­kets will de­velop faster and health­ier, said Joe Ngai, man­ag­ing part­ner of McKin­sey China.

“Un­doubt­edly Chi­nese fi­nan­cial in­sti­tu­tions and China’s cap­i­tal mar­kets have come a long way in the past decade. How­ever, given China’s eco­nomic growth, there is an in­creas­ing need for Chi­nese fi­nan­cial mar­kets and in­sti­tu­tions to ac­cel­er­ate their devel­op­ment to ef­fi­ciently al­lo­cate cap­i­tal be­tween in­vestors and is­suers with the proper risk man­age­ment,” said Ngai.

Apart from seek­ing for more busi­ness growth driv­ers in China, for­eign banks are also eye­ing more op­por­tu­ni­ties for do­ing busi­ness with Chi­nese com­pa­nies over­seas as an in­creas­ing num­ber of the firms are ex­pand­ing their global foot­print, es­pe­cially in the economies par­tic­i­pat­ing in the Belt and Road Ini­tia­tive.

To give stronger sup­port to the global ex­pan­sion of Chi­nese com­pa­nies, Citi has been im­prov­ing its trea­sury and trade so­lu­tions based on a net­work cov­er­ing more than 100 coun­tries and re­gions.

Em­pha­siz­ing on of­fer­ing good cash man­age­ment and trade fi­nanc­ing prod­ucts, Citi aims to help its cor­po­rate clients im­prove ef­fi­ciency and lower op­er­at­ing costs. For those that have started to scale their busi­ness over­seas, the bank of­fers cen­tral­ized op­er­a­tion and man­age­ment of for­eign ex­change funds, in ad­di­tion to cash man­age­ment, pay­ment and set­tle­ment, and con­sult­ing ser­vices pro­vided at ear­lier stages of cor­po­rate busi­ness devel­op­ment.

Pei noted that China’s fi­nan­cial sec­tor has en­tered the stage of con­tin­u­ous re­forms, which is re­flected by in­ter­est rate lib­er­al­iza­tion, ex­change rate lib­er­al­iza­tion and a grad­ual open­ing of the cap­i­tal ac­count. It re­quires a fi­nan­cial sys­tem that is flex­i­ble enough and ef­fi­cient enough to sup­port the world’s sec­ond-largest econ­omy.

“Banks could no longer sim­ply rely on the dif­fer­ence be­tween their in­ter­est in­come and the amount of in­ter­est paid out to their lenders. Mean­while, the reg­u­la­tor will en­cour­age in­no­va­tion in fi­nan­cial ser­vices. In con­clu­sion, we must em­brace these changes to strengthen con­nec­tions to our clients,” he said.

Be­sides, com­mer­cial banks are also fac­ing chal­lenges to serve emerg­ing com­pa­nies that are driven by growth in China’s new econ­omy. To quickly re­spond to the de­mands of these com­pa­nies, Citi has formed a spe­cial team to pro­vide them with cus­tom­ized prod­ucts based on its close in­te­gra­tion with over­seas mar­kets, us­ing the bank’s tech­nol­ogy plat­form.

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