Bank of China officially opens in Chicago

Executives and guests celebrate the opening of the Chicago branch of Bank of China on Friday. From left: Wu Shiqiang, general manager of Bank of China USA; Andrew Spinelli, associate director of international relations and protocol at Mayor's Office of Chicago; Zhao Weiping, Chinese consul-general to Chicago; Yue Yi, vice-president of Bank of China; Pan Gongsheng, deputy governor of the People's Bank of China; Leo Melamed, chairman emeritus of CME Group; and Zhuang Xuehui, branch manager and first vice-president of BOC Chicago. Hu Haidan / China Daily

Bank of China Ltd, one of the country's biggest banks, has officially opened its branch in Chicago, where it seeks to tap business from 17 US states amid an expansion wave by Chinese companies.

"China-US banking cooperation has a profound impact on key sectors in the global financial market," said Yue Yi, a BoC vice-president. "As a large global banking group, Bank of China will spare no effort in promoting China-US partnership and seizing opportunities in banking development between the two countries."

The Chicago branch, BoC's fourth in the United States since 1981 (two are in New York City and one is in Los Angeles), will serve Chinese companies doing business in Illinois and other Midwestern states. It will provide trade and supply-chain financing, working-capital loans, trade settlement, commercial-property mortgages and foreign-exchange services.

The branch, which was approved by US banking regulators last year, opened for business in late December on the 48th floor of an office tower along the Chicago River in the city's center. A ceremony for its opening took place on Friday.

With stable growth in the Chinese market, BoC is accelerating expansion overseas as it becomes increasingly integrated globally and companies from China step up their levels of investment abroad.

"The strategy is to serve Chinese enterprises going abroad as well as multinational companies investing in China," Yue said.

For the third quarter of 2012, BoC reported net income of 34.8 billion yuan ($5.5 billion), up 17 percent from the same period of 2011. Net interest income was 65.4 billion yuan, a 15 percent increase from the year-earlier quarter.

The Shanghai-listed bank is expected to disclose its fourth-quarter and full-year 2012 earnings with securities regulators in China this week.

Mayor Rahm Emanuel said in a congratulatory letter that the opening of BoC's newest US branch reflects strong and growing economic ties between China and Chicago. The bank becomes another financial resource for the 40 or so Chinese enterprises already operating in and around the third-largest US city, and its presence could encourage regional investment.

Others among China's five biggest banks have been expanding in hope of securing new business from Chinese companies' US activity. New York consulting firm Rhodium Group found that Chinese investment in the US increased 17 percent in 2012 to a record $6.5 billion..

Agriculture Bank of China Ltd opened a New York branch last May. At the opening ceremony, the bank announced an agreement to provide financing to China Construction America Inc, the US arm of China's biggest building contractor.

Industrial & Commercial Bank of China Ltd announced in November the formation of ICBC (USA), following US regulatory approval of its acquisition of Bank of East Asia USA in May.

As the largest Chinese bank for foreign-exchange transactions, 101-year-old BoC also intends to capitalize on increasing use of China's yuan currency in international business.

Leo Melamed, chairman emeritus of US derivatives-exchange operator CME Group Inc, also believes the opening of BoC's Chicago branch will help further yuan internationalization.

"It's a continuation of the growth of Chicago as an international center, and it will certainly be a boon to business between Chicago and the Midwest, and China," Melamed said. "I think this is a very important step in that direction."

By the end of 2012, deposits in offshore yuan-denominated accounts - outside the Chinese mainland, mostly in Hong Kong - totaled 600 billion (about $95 billion). That was double the figure from two years earlier.

Also last year, cross-border business of BoC and ICBC surged by a combined 41 percent due to growing global demand for the yuan, though use of the Chinese currency in the US was basically unchanged from 2011.

In February, Chicago-based CME Group introduced offshore, Hong Kong-traded foreign-exchange contracts deliverable in yuan through its CME Globex electronic trading platform. In September 2012, CME selected BoC as a clearing bank for settlement and collateral custodian for the US company's trading platforms.

haidanhu12@chinadailyusa.com