Hang Seng amibitious for mainland related business

In Vincent H C Cheng's eyes, an investment worth over 3 billion HK dollars (38.5 million US dollars) is just a beginning of Hang Seng bank's road to Chinese mainland.

The chief executive of Hang Seng bank, Hong Kong's second largest listed bank, was far more ambitious for mainland related business, which he regards as one of the key factors leading to the futures' success of the bank.

"We hope to set up branches or sub-branches in every major cities in the coastal area (of Chinese mainland)," he told Xinhua in a recent interview.

The bank has newly won approval to open two sub-branches, one in Shanghai and one in Fuzhou, Fujian province.

With the addition of these sub-branches, Hang Seng's network inmainland will comprise five branches, three sub-branches, and two representative offices in seven cities.

Early this year, the bank acquired 15.98 percent interest in the Industrial Bank Co. of a total consideration of 1,726 million RMB yuan (215.7 million US dollars).

"It's a major breakthrough in our mainland development," said Cheng. The acquisition opened the door for cooperation with a major mainland joint-stock commercial bank and complemented Hang Seng's mainland network and business expansion, he added.

"Money is not a problem," said Cheng, adding that Hang Seng waslooking for more opportunities to acquire part of the interest of other mainland financial companies.

Cheng said that Hang Seng's mainland business was already profitable and "encouraging" if new investment was excluded. In the first half of 2004, the loan portfolio of its mainland branches increased 62.4 percent to 6,162 million HK dollars (790 million US dollars), representing 3 percent of its total advances to customers.

Furthermore, he said the ratio of gross non-performing advancesto gross advances to mainland customers was not higher than the bank's overall ratio, which was 1.6 percent.

"Our mainland related business in Hong Kong also made good progress," he added.

With the approval for an investment quota of 50 million US dollars to invest in the mainland securities market following a QFII (Qualified Foreign Institutional Investor) permit, Hang Seng bank launched A-share services and related products for Hong Kong and overseas customers.

Besides RMB services at its Hong Kong branches, the bank unveiled a new service program in June, targeting immigrants from the mainland to help them adapt to the living environment and integrate into the Hong Kong society.

The program is welcomed by new comers since it provides essential information of starting a new life in Hong Kong as well as consultation service on property market, tax system, education system and personal financial management.

In the first half of 2004, its attributable profits increased 24.4 percent to 6,245 million HK dollars (800 million US dollars) despite a low interest rate environment and squeezed interest margin.

Looking forward, Cheng said intense competition and depressed interest rate margin would continue to pose challenges to future operation. However, he said, "We will make further efforts in developing mainland business, together with other multiple services like consumer financing, trade finance solutions" to meetall these future challenges.

Source: Xinhua