GROWTH STRAT­EGY

Play­ing an ac­tive role in open­ing-up

China Daily - - BUSINESS - By JIANG XUEQING jiangx­ue­qing@chi­nadaily.com.cn

Cel­e­brat­ing its 160th an­niver­sary in China this year, Stan­dard Char­tered is look­ing to play an ac­tive role in the coun­try’s fur­ther open­ing-up to for­eign in­vestors.

“First and fore­most, among the things we have iden­ti­fied as crit­i­cal for our future is to play a very ac­tive role in the on­go­ing open­ing of China. By that we mean the in­ter­na­tion­al­iza­tion of the ren­minbi, and also the open­ing-up of the Chi­nese econ­omy and cap­i­tal to de­vel­op­ment in other parts of the world, most no­tably along the Belt and Road routes,” said Bill Win­ters, group CEO at Stan­dard Char­tered.

Both of th­ese ar­eas are cen­tral to the bank. Given its pres­ence in al­most all of the economies in­volved in the Belt and Road Ini­tia­tive and its very strong in­fra­struc­ture fi­nanc­ing ca­pa­bil­ity, Stan­dard Char­tered is pleased to help China in that mis­sion, Win­ters said in an in­ter­view with China Daily in Bei­jing.

Stan­dard Char­tered has lo­cal bank­ing op­er­a­tions in many Belt and Road-re­lated economies. It op­er­ates as a lo­cal bank in 17 coun­tries in Africa where it has been run­ning, in many cases, for well over 100 years. That gives the bank a struc­tural ad­van­tage that comes from un­der­stand­ing the des­ti­na­tion mar­kets, hav­ing client and gov­ern­ment re­la­tion­ships there, and play­ing an ac­tive role in lo­cal cur­rency risk and cash man­age­ment, he said.

The bank re­cently an­nounced a $20 bil­lion fi­nanc­ing pro­gram for projects linked to the Belt and Road Ini­tia­tive.

Dur­ing the in­ter­view, Win­ters shared his views on a num­ber of top­ics, in­clud­ing China’s open­ing-up, sup­ply­side re­form and the boom in fi­nan­cial tech­nol­ogy. China is set to open wider to the out­side world. What’s your ex­pec­ta­tion for the fi­nan­cial sec­tor? What op­por­tu­ni­ties will this open­ing-up bring to Stan­dard Char­tered?

The open­ing-up will take many forms. First is cre­at­ing the in­fra­struc­ture for cap­i­tal to trans­fer in and out of China, with key ini­tia­tives such as the stock con­nect and bond con­nect be­ing very im­por­tant com­po­nents of that. We are very happy to have been one of the ear­li­est adopters of the bond con­nect pro­gram and one of its most ac­tive par­tic­i­pants.

It is also about giv­ing in­ter­na­tional com­pa­nies greater ac­cess to the Chi­nese mar­ket, which is hap­pen­ing grad­u­ally. We re­ceived the li­cense re­cently to un­der­write panda bonds — RMB-de­nom­i­nated bonds is­sued by non-Chi­nese en­ti­ties in China. The own­er­ship rules for lo­cal se­cu­ri­ties and as­set man­age­ment com­pa­nies have been re­laxed to al­low higher lev­els of own­er­ship. We see this as part of a process that will con­tinue to the point where in­ter­na­tional fi­nan­cial ser­vices or­ga­ni­za­tions can com­pete on a level play­ing field with lo­cal ones.

Twenty years ago, most multi­na­tional com­pa­nies sim­ply wanted to man­u­fac­ture in China, but the na­ture of de­mand is very different now: Cor­po­rates are see­ing China as an end mar­ket. That means they need to change dra­mat­i­cally as well. So our abil­ity to help them raise lo­cal fund­ing to build up lo­cal fran­chises, to man­age cross-bor­der work­ing cap­i­tal flows, and to go through China’s in­ter­bank bond mar­ket, th­ese as­pects to the lo­cal fi­nan­cial busi­ness are all ar­eas in which we would like to play a larger role when it comes to sup­port­ing com­pa­nies’ needs.

How do you see the progress of the Belt and Road Ini­tia­tive, which is in its fifth year now? Stan­dard Char­tered has been treat­ing the ini­tia­tive as one of its pri­or­i­ties. What’s the plan go­ing for­ward?

We have felt a steady in­crease in our own Belt and Road Ini­tia­tive-re­lated ac­tiv­i­ties. The first wave of ma­jor Belt and Road projects had more of a gov­ern­ment-to-gov­ern­ment di­men­sion. There was a role for banks like Stan­dard Char­tered to play, but it tended to be small.

As the next wave is more pri­vate sec­tor to pri­vate sec­tor, typ­i­cally with the com­bi­na­tion of some State or­ga­ni­za­tions on ei­ther side, the com­plex­ity of th­ese fi­nanc­ing pack­ages is high. The role we can play in bring­ing th­ese pieces to­gether and pro­vid­ing the key com­po­nents of cap­i­tal that will en­able a trans­ac­tion to hap­pen is steadily in­creas­ing.

Our ob­jec­tive is to pro­vide a holis­tic pack­age for our clients. We have Man­darin speak­ers in al­most all of our in­ter­na­tional branches, who are very closely linked with our China team to make sure that we can deal with both cross-bor­der fi­nanc­ing needs and lo­cal bank­ing needs.

With the rapid growth of fin­tech and the boom in in­no­va­tive fi­nan­cial prod­ucts in China, it seems that win­ter is com­ing for com­mer­cial banks. What ap­proaches should banks take to face th­ese chal­lenges?

The fin­tech revo­lu­tion is fas­ci­nat­ing be­cause, in many ways, it presents chal­lenges to the ex­ist­ing sys­tem of fi­nan­cial in­sti­tu­tions. In other ways, it is lib­er­at­ing, in par­tic­u­lar for a bank like ours.

We face a threat from chal­lenger banks, on­line star­tups or other banks that can at­tack us in a way that they might not have been able to pre­vi­ously. But fin­tech and dig­i­tal bank­ing will also give us a chance to es­tab­lish a mean­ing­ful pres­ence in new mar­kets.

We see fin­tech as a great en­abler, as some­thing that can level play­ing fields so that a bank like ours — with good tech­nol­ogy and good prod­ucts — can reach more clients more ef­fi­ciently, con- trib­ut­ing to over­all sat­is­fac­tion among cus­tomers and bank­ing mar­kets.

Can you share your ob­ser­va­tions about China’s sup­ply­side re­form? How will Stan­dard Char­tered sup­port the coun­try’s key na­tional ini­tia­tives?

Sup­ply-side re­form in China has come in a Chi­nese way, different from the way that other coun­tries have dealt with over­ca­pac­ity in some in­dus­tries. China has taken a de­lib­er­ate but thought­ful ap­proach. It has em­pha­sized so­cial co­he­sion, pro­tect­ing the rights of work­ers in the in­dus­tries that are be­ing re­duced.

Stan­dard Char­tered is very much aligned with China’s pri­or­i­ties to­day. We heard VicePremier Han Zheng’s speech at the China De­vel­op­ment Fo­rum on March 25, which was very fo­cused on on­go­ing eco­nomic re­form, lib­er­al­iza­tion, open­ing-up, and cast­ing eco­nomic in­flu­ence from China to other parts of the world to ben­e­fit the broader com­mu­nity where China op­er­ates. This is at the heart of our China busi­ness.

The de­gree of our align­ment with what is hap­pen­ing in China is very sig­nif­i­cant. We bring knowl­edge of the lo­cal, com­mer­cial, so­ci­etal and reg­u­la­tory en­vi­ron­ments, which can only come from hav­ing such a deep and long his­tory of op­er­at­ing in the coun­try, mean­ing we truly add some­thing to the equa­tion.

What is Stan­dard Char­tered’s plan to get in­volved with the Guang­dong-Hong Kong-Ma­cao Greater Bay Area de­vel­op­ment strat­egy?

The Greater Bay Area is a big, strate­gic pri­or­ity for us be­cause Shen­zhen is China’s in­no­va­tion cen­ter, south­ern China is the world’s man­u­fac­tur­ing hub, and Hong Kong is China’s big­gest fi­nan­cial cen­ter. Nowhere else in the world are there three com­po­nents within a 45-minute travel ra­dius post high-speed rail. You can quickly in­no­vate, man­u­fac­ture and fi­nance in one col­lec­tive ecosys­tem. It is some­thing we plan to put a lot of ef­fort and re­sources into.

PRO­VIDED TO CHINA DAILY

Stan­dard Char­tered’s booth at an exhibition in Shang­hai. The bank is cel­e­brat­ing its 160th an­niver­sary of op­er­a­tion in China this year.

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