Foreign banks hoping to do much more business with Chinese firms operating outside of China
Citi, the US banking giant, is set to redeploy some of its mainland staff to countries linked with the Belt and Road Initiative, and hire at least 25 more staff in its regional operations outside of China, to cope with an expected rise in business related to the economic plan.
Several foreign banks are rethinking their strategies, as contracts and agreements start being generated by the Belt and Road – President Xi Jinping’s flagship scheme to drive greater trade into emerging Asia and beyond.
Analysts suggest the large universal banks are well placed to benefit from it, thanks to their role in financing global trade.
“Because the very local businesses in the Chinese domestic market are well covered by the local banks, our biggest value to clients is often benefiting from our global network,” said Gerald Keefe, Citi’s head of corporate banking in Asia Pacific, claiming Citi now does business with Chinese companies in 85 countries around the world, and operates in 58 Belt and Road countries.
In contrast international banks have found it harder to gain traction serving Chinese clients on the mainland.
Four international banks (Bank of East Asia, Citi, HSBC and Standard Chartered) first set up wholly owned subsidiaries in the Chinese domestic market in 2007.
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However, the four, and those that followed, still have less than two per cent market share, and mainly deal with multinationals and handle the international dealings of larger Chinese corporates and wealthy individuals.
Keefe singled out Association of South East Asian Nations (Asean) countries particularly as likely growth areas, as well as the Middle East, Russia and Kazakhstan, and those are the most likely places for the 25 new roles.
Chinese investment in Asia grew 40 per cent in the first half of this year, compared with the second half of last year, according to PwC analysis, which the professional services firm partly attributed to Belt and Road-linked activity.
Keefe said Citi would primarily be looking to hire corporate bankers, as it would be relationships with Chinese clients that would be at the “centre of the plate” for the strategy.
There’s certainly strong hiring going on, particularly from the big Chinese banks and the investment funds. From what I’ve seen, most international banks, however, are still tending to hire bankers in China, who can then turn their attention to looking at outbound Belt and Road investment
JOHN MULLALLY, DIRECTOR OF FINANCIAL SERVICES IN HONG KONG AND SHENZHEN AT RECRUITMENT FIRM ROBERT WALTERS
Other services such as investment banking or trade and treasury solutions will be provided by Citi’s bankers already in those countries.
John Mullally, director of financial services in Hong Kong and Shenzhen at recruitment firm Robert Walters, says Citi is by no means alone in looking to boost its presence along the Belt and Road routes.
“There’s certainly strong hiring going on, particularly from the big Chinese banks and the investment funds,” he said.
“From what I’ve seen, most international banks, however, are still tending to hire bankers in China, who can then turn their attention to looking at outbound Belt and Road investment.”
Earlier this year, ICBC Asia chief executive, Jiang Yisheng, said Chinese banks were more competitive than their international counterparts in the Belt and Road projects.Regional banks, especially those in Singapore, were also starting to look seriously at how to best target the scheme.
However, Keefe said he didn’t consider competition too much of a concern for Citi.
“We work cooperatively with Chinese banks; they are our clients, and we are theirs, and the same is true for the regional banks,” he said, citing as evidence the Rainbow Bond issued by Bank of China to help finance their branches along the Old Silk Road trading routes, which Citi led.
“The best thing to do is to work out where the clients want to work with us, and go with that