Bank of Beijing, one of the country's largest city commercial banks, has got the go-ahead from the industry regulator to open a branch in Tianjin and is planning a listing in the near future, its top management revealed yesterday.
The bank is the second of China's 117 city commercial banks to win regulatory approval to venture beyond its home base, following the Bank of Shanghai, which opened a branch earlier this year in Ningbo in East China's Zheijiang Province.
"We hope to open the Tianjin branch at the end of the year and plan more outlets in the Yangtze and Pearl River Delta regions," said Bank of Beijing Chairman Yan Bingzhu, adding that the Tianjin branch is the first step in the bank's nationwide expansion.
The China Banking Regulatory Commission (CBRC) last year allowed city commercial banks that are as powerful as leading joint-stock commercial banks to expand their business outside their home base in order to sharpen their competitive edge. But very few of them meet this standard, a professor at Beijing's University of International Business and Economics, told China Daily.
Statistics from the CBRC show that the average capital adequacy ratio of the country's 117 city commercial banks hovered around 2.7 per cent by the end of 2005, far from the baseline of 8 per cent.
Around 80 per cent of city commercial banks fail to meet the requirement. If they are still not up to the standard by the end of this year, they will be merged or closed down.
"Given the close economic and geographic relationship between Beijing and Tianjin, it is natural for us to choose this neighbouring port city," said Yan Bingzhu. "Besides, we are very optimistic about the future of the Binhai New Area, the new coastal area in Tianjin which should be developed into a gateway to North China."
According to Bank of Beijing President Yan Xiaoyan, the bank will focus on SME (small and medium-sized enterprises) business in the new branch, since more Beijing enterprises are moving their business to Tianjin.
"Meanwhile, by taking advantage of ING's strength in the wealth management business, we will also roll out new services and insurance products to well-heeled customers in Tianjin," Yan added.
Dutch financial giant ING Group purchased a 19.9 per cent stake in the bank last year, while the World Bank's International Finance Corp took a 5 per cent stake.
While accelerating its expansion, Bank of Beijing is also gearing up for an initial public offering (IPO).
"We will float shares at an appropriate place and an appropriate time, and we are not far off from the day that we will list," Yan Bingzhu told reporters.
In a statement earlier this year, the bank said it may launch its IPO by the end of 2007.
"We have been in discussion with investment banks about the listing," Yan added. "Currently, we are reshuffling our structure to pave the way for the listing."
Bank of Beijing was founded in 1996 as Beijing City Commercial Bank.
The bank was renamed last January, when it first revealed the plan to introduce foreign strategic investment and seek a public listing to support its expansion.
Facts and Figures
Bank of Beijing, founded in 1996, is one of the country's 117 city commercial banks. It was originally named Beijing City Commercial Bank.
Its non-performing loan ratio fell to 4.06 per cent at the end of June from 4.22 per cent at the beginning of the year. And its assets increased to 238.5 billion yuan ($29.92 billion) at the end of June from 233 billion at the end of 2005.
Bad loans were fully provided for and its capital adequacy ratio stood at 12.85 per cent at the end of the first half.