After seeing phenomenal growth, 2006 is a year of consolidation and network expansion for Katherine Tsang, the China CEO of Standard Chartered.

The Asia-focused British bank topped analysts' forecasts with a 19 per cent rise in yearly pre-tax profit last year, fuelled by its biggest-ever acquisition and presence in fast-growing markets.

According to the bank's 2005 annual report, pre-tax profit rose to US$2.68 billion from US$2.25 billion. Its Asia operations made over three-quarters of the profit.

"Although China is still a very small part of the global business for the moment, China is one of the best growth stories for Standard Chartered in Asia," Tsang told China Daily. She is the first female CEO for Standard Chartered China

Standard Chartered's total income on the Chinese mainland grew by 90 per cent last year, with branches and sub-branches jumping from 8 to 14. The number of customers grew by 120 per cent by the end of 2005 and its number of staff members had doubled.

"We are trying to reach out as far as we can in network distribution," said Tsang.

The bank has just got the go-ahead from the China Banking Regulatory Commission to upgrade its Qingdao representative office to a branch. Tsang said she believed the number of branches will exceed 20 by the middle of this year.

When choosing a new city to enter, Tsang has her own criteria.

She said there are obvious cities that many foreign banks are in, such as Beijing and Shanghai, and there are some less obvious cities that nobody goes to. Standard Chartered might surprise people by entering some less obvious cities, Tsang explained, but declined to name those places.

"We would like to achieve a balance between cities with growth potential and those that can give you immediate yields," Tsang added.

When striving for a rapid network expansion, Tsang is also aware of the importance of consolidating the bank's current fundamentals.

"When you are faced with explosive opportunities, it is your infrastructure, people skills and people integration, that really matters," said Tsang. "And it is not just catering for what you need now but catering and anticipating for what's coming."

Network expansion is one part of Standard Chartered's plan.

The other parts are broadening the product range, improving relationships with all parties in the local market, improving service quality and developing its skills.

The bank has done a lot in terms of innovations in both the wholesale and consumer bank side; 25 products were rolled out last year. It also saw the tremendous growth of SME (small and medium enterprises) financing.

The bank will supplement its organic growth with strategic acquisitions.

Last year, it spent about US$123 million to buy a 19.99 per cent stake in Bohai Bank, based in North China's Tianjin Municipality.

"We continue to look out for opportunities where they complement Standard Chartered's organic approach," said Tsang.

She added that the right partner for Standard Chartered should allow the bank to do something that it can't do organically. Furthermore, the co-operation should deliver a decent return to the bank's shareholders.

China is scheduled to scrap restrictions on foreign banks in December according to its World Trade Organization (WTO) commitments. At that time, foreign banks will be allowed to provide a retail renminbi business to local residents and set up branches in any Chinese city.

"I don't think domestic banks will lose any competitiveness, thanks to their huge networks and well-known branding among local citizens," said Tsang, citing foreign banks' less than 2 per cent market share as proof. "In contrast, they will find more room for co-operation given foreign counterparts' new thinking and expertise."

Standard Chartered is applying for a licence to offer RMB business to local customers and seeking strategic alliances ahead of the opening up of the market.

On a personal note, Tsang said her gender was not an issue. "In a company with lots of female staff, I never worry about gender, but worry if the people fit the job and enjoy it," she said.

"And it is the same with me." She thinks she couldn't be luckier, entering China just when it is the focus of the world. "It is the right time and right place for me," she added.

Source: China Daily