Chicago branch boosts Bank of China abroad

Updated: 2012-12-07 12:56

By Chen Weihua in New York (China Daily)

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Chicago branch boosts Bank of China abroad

Wu Shiqiang, general manager of Bank of China USA, expects final regulatory approval by year's end for the opening of a branch in Chicago. BOC, one of China's four major State-controlled lenders, now operates three US branches. Chen Weihua / China Daily

Bank of China Ltd plans to open for business in Chicago later this month, bringing the number of US branches to four for the major State-controlled lender, which is expanding its international footprint.

"The well-appointed, best-staffed new branch with its premium location is expected to be up and running soon. We are only waiting for a final check by the OCC," said Wu Shiqiang, general manager of Bank of China USA. He was referring to the Office of the Comptroller of the Currency, the federal regulator whose go-ahead Wu expects before Dec 31.

The US Federal Reserve approved BOC's Chicago branch in May.

Special:Chinese enterprises in the US

The branch will be on the 48th floor of an office tower along the Chicago River in the center of the third-most-populous US city. BOC has said its new location will focus on Chinese companies seeking to expand abroad, "good-quality" local companies and financial institutions.

Stressing the lengthy process of getting a foreign-bank branch approved by US regulators, Wu said Beijing-based BOC plans to open more offices to better serve Chinese companies operating in the country. The lender currently has three branches - two in New York and one in Los Angeles.

The branch in Manhattan's Chinatown was opened in 1985 but will be moved next year to Flushing, in the borough of Queens, to serve that area's growing Chinese-American and Chinese expatriate community.

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With its Chicago branch, BOC will be strategically located in three major US states from east to west - New York, Illinois and California. Wu, who took his current post in 2010 after seven years with BOC in Australia, said the bank's US arm already serves customers nationwide.

For the third quarter, BOC reported net income of 34.8 billion yuan ($5.5 billion), up 17 percent from the 29.8 billion yuan in profit earned in the same period of 2011. Net interest income was 65.4 billion yuan, a 15 percent increase from a year earlier. Net interest margin grew slightly, to 2.1 percent, between the end of the second quarter in June and the end of the third on Sept 30.

BOC, which is China's biggest bank for foreign-exchange transactions, also reported noninterest income from credit cards, sales of wealth-management products, and international trade-related settlements and clearing of nearly 24.3 billion yuan, up by 3 billion yuan from the second quarter.

The bank, which was founded in 1912, opened a representative office in New York in 1936. Its midtown Manhattan branch, at Madison Avenue and East 48th Street, opened in 1981, two years after China and the US formally established diplomatic ties.

As it marks its 100th anniversary this year, Bank of China is also reflecting on three decades of business in the US, said Wu. He quoted Confucius' aphorism sanshi erli - "a man stands on his own feet at age 30", a measure of achievement.

In late November, BOC became the first Chinese bank to take part in the US securitization market, joining a group of lenders in selling almost $1 billion in commercial-mortgage-backed securities. The bank had contributed about $211 million to a $950 million loan - with fellow lenders Deutsche Bank AG, Goldman Sachs Group Inc and UBS AG - to a partnership between Vornado Realty Trust and developer Donald Trump. Those two parties used the 10-year loan to refinance an office building in Manhattan.

In February, the Chinese bank agreed to lend $170 million to the Mandarin Oriental hotel in Manhattan.

Selling off the real estate loan as securities will help BOC free up capital to make more loans to US customers. The bank has become increasingly active in recent years in real estate lending, meeting a market demand following the retreat of several cash-strapped European banks.

According to Real Capital Analytics, of the eight loans totaling $1.8 billion that BOC disbursed last year, six were for New York properties, including a five-year, $260 million loan for 3 Columbus Circle, near Central Park. The property is owned by two major New York brokers, SL Green Realty Group and the Moinian Group.

BOC also joined other banks this year in providing syndicated loans to the New York Stock Exchange, a move Wu interpreted as "demonstrating the bank's foray into mainstream US society".

In September, Chicago-based CME Group Inc announced its selection of BOC as a clearing settlement bank and collateral custodian for the company's CME derivatives exchange.

The bank has taken steps to improve service to Chinese companies in the US, including through global credit lines and consulting, Wu said. He also cited BOC's business, launched two years ago, to offer yuan-denominated products and services to facilitate trade and investment.

The arrival of more Chinese banks in the US market means increased competition but also more opportunities for cooperation, as in syndicating loans, Wu said. He believes competition will lead to improved service and provide a better platform for Chinese companies that invest and operate in the US.

China's foreign direct investment in the United States totaled $6.3 billion through the first three quarters of this year, compared with $4.5 billion for all of 2011, according to New York-based Rhodium Group.