ICBC hops into Australia

Tom McGregor

The world's largest bank is not JPMorgan Chase, CitiBank or even Bank of America. It's not even headquartered anywhere in the Western Hemisphere. Industrial and Commercial Bank of China, or ICBC, has earned top ranking as the most profitable bank in the world, and seeks to open more branches worldwide with a focus on the 'land down under' of Australia.

The nation, known for its kangaroos, koala bears and the rugged Outback, has witnessed nationwide prosperity in recent years with a territory that is rich in mining resources, relatively stable government and low crime rates. The country has transformed into a magnet for migrants from Asia.

The cities of Sydney, Melbourne and Perth can lay claim to strong and vibrant Chinese communities along with a flood of tourism dollars and visitors from China. Accordingly, it should come as no surprise that ICBC would open more branches in Australia and expand its localized investment banking services.

ICBC "has opened a new branch in Victoria, seeking to expand its footprint in Australia", as reported by the Sydney Morning Herald. "The Melbourne Office is ICBC's third branch in the country after Sydney and Perth. It will focus on developing new business outside of the resource sector, attracting new Australian and Chinese corporate and private clients."

The Melbourne branch would be more than just a location for customers to deposit their cash into bank accounts or to take out mortgage loans. ICBC intends to tap into the regional investment banking business as well.

Lili Wang, executive director of ICBC's global board and senior executive vice president, told the Sydney Morning Herald, the "Melbourne branch will be mainly focusing on sectors including agriculture, property and infrastructure, health care, as well as renewable energy and natural resources".

She added, "we are looking to partner with local wealth management firms and expect to become one of its main participants in the sector."

ICBC could strike gold by offering more banking and financial services for its wealthy clients, especially Chinese migrants. It should expand its yuan settlements (Chinese currency) operations.

Australia has taken a favorable view of inviting more wealthy Chinese migrants to the country. The Australian government has introduced an investor visa, which stipulates that any foreigner who invests at least $5 million in government bonds, managed funds or unlisted private companies in the country would qualify for permanent residency in the country.

So take note, ICBC should consider offering a special "Australia Investor's Visa" account with a $5 million minimum balance.

Meanwhile, ICBC has already turned a profit with its first two branches opened in the country. The Perth branch targets Chinese mining companies trying to invest in Western Australia, while the Sydney branch caters to a more diverse group of corporate (Chinese and Australian) corporate clients.

"The Sydney branch has enjoyed strong growth since 2008 and holds more than $4 billion in assets and recorded a pre-tax profit of $49 million this year," according to the Sydney Morning Herald.

It added, "ICBC's Australian corporate clients include blue-chip companies such as Westfield and Qantas and it has provided capital for Victoria's desalination plant, the Royal Adelaide Hospital renovation and coal terminals in NWS and Queensland."

Chinese migrants are happy to bring their investments to Australia despite gloomy economic conditions, since China and Australia have continued to enjoy strong GDP growth rates.

The two countries appear worlds apart culturally, but as trading partners they have engaged in mutually beneficial cooperation.

"In recent years, China-Australia's economic and trade cooperation has become increasingly diversified," according to Xinhua. "By the end of 2011, China had $1.14 billion cumulative investment in Australia, which has increased by 32.1 percent over the same period of last year."

ICBC has played a pivotal role to boost trade and investments between the two countries, while a bright outlook remains on the horizon.

The views do not necessarily reflect those of China Daily.

Mcgregor@chinadaily.com.cn

 

Tom McGregor's previous articles:

Samsung eats into Apple's dominance

China wealth fund pivots to Asia

Daunting challenges ahead for Chinese solar companies

Drug makers look East for cooperation