Collaboration at Home and Abroad, the Bank Elaborates the New World of Cross-border Finance
Release Date:2014-03-13 15:35:00

At the beginning of 2014, IPO of Magnum which operates three clubs in Lan Kwai Fong in Hong Kong triggered a commotion among HK investors。 This company , offering lively music and dancing pools with snacks and alcoholic beverages, gimmicked as the first "club shares" by investment banks, obtained 3,000 times oversubscription, and became the “King of increase” with an increase of 89% on the first day of listing in recent Hong Kong stock market。

Tao Wen, general manager of personal financial service of Bank of Communications, told the reporter from 21st Century Economy Report that as one of the major underwriters of the stock, the Bank of Communications International recommended some high net worth clients to buy Magnum shares, and the client involved in the IPO placement obtained considerable profit.

The introduction of Shanghai and Hong Kong Link will allow more and more high-level clients to focus on cross-border investment, and the Bank of Communications is communicating internally to make better use of the platform of Bank of Communications International, to provide opportunities of Hong Kong new share subscription and IPO international placement for domestic clients with legitimate overseas assets.

It is understood that in the past the cross-border investment services by domestic commercial banks were only for a few client groups like private banks。 Once the Hong Kong and Shanghai Link is launched, the client groups focusing on cross-border investment will significantly increase, and the product design and organization structure of cross-border financial services of commercial banks are facing a big adjustment。

Cross-border finance stratification

21st Century: Recently, a number of commercial banks began to launch new strategy for cross-border finance. Who are the main clients of cross-border finance?

Tao Wen: In the area of retail business, the cross-border finance we are talking about was mainly for the cross-border fortune management services for high-end clients. However, at present the situation is changing. The demand for cross-border finance is more popular. If qualified domestic clients are allowed to directly buy overseas stock in the future, the cross-border finance will attract more extensive attention. In addition, middle-class families also show great demand on overseas studying finance, cross-border business travel and other aspects, and the cross-border finance is no longer exclusive to private banks.

In fact, the demand for cross-border finance is showing stratification。 In 2013, to meet different client needs, the Bank of Communications began to integrate the cross-border financial services of Ward Fortune into three sectors, including cross-border fortune management, cross-border overseas studying finance and cross-border business travel finance, focusing on different clients。

The "Cross-border fortune management" focuses on services for middle and high-end clients with global asset allocation; the "cross-border financial expense of studying abroad" goals middle and high-end families with demand for overseas studying finance; the "cross-border business travel finance" has a broader client group for outbound travel, work assignments and expatriate populations in China.

21st Century: What influence will the popularization of cross-border finance have on the organization architecture and retail business pattern of commercial banks?

Tao Wen: The changes can be seen clearly from one dimension. Two years ago, we had only five or six branches to provide cross-border fortune management services for high net worth clients. Recently, all the 37 branches of the Bank are capable of handling the business, 32 of which have a number of successful cases. We have been making great efforts in allocating and training relevant professionals at the branch level, and selecting high-quality network resources at home and abroad. It is expected that there will be nearly one hundreds "Ward Fortune Cross-border Financial Service Centers" opened during the year, to provide nationwide professional cross-border financial services for clients.

Currently, the retail financial products of the Bank of Communications consist of three categories: our own products, products sold on a commission basis and cross-border products. We now continue to improve individual cross-border products and services, which are positioned as providing rich services for high-end clients to increase client stickiness. However, currently, the cross-border finance is not a major profit point for commercial banks.

The “catfish “of Shanghai and Hong Kong Link。

21st Century: How will the upcoming Shanghai and Hong Kong Link influence the cross-border finance of commercial banks?

Tao Wen: After the Hong Kong and Shanghai Link is formulated, domestic and Hong Kong investors can mutually buy A shares and Hong Kong stocks, which can be said to broaden the scope of cross-border securities investment, but for the cross-border finance with broad connotation, it is only an addition of product。

However, it should not be overlooked that, due to the relatively low threshold for stock investment, the Shanghai and Hong Kong Link is expected to educate clients of cross-border investment and increase the concern of cross-border finance by the middle-level client of commercial banks, which was concerned mainly by high-end clients and professional investors in the past.

In fact, the change has occurred, and the financial radio was talking about the trend of H shares in the morning。 From this point of view, the Hong Kong and Shanghai Link will play a leading role in client expansion of cross-border finance。

21st Century: From visual impression, Shanghai and Hong Kong Link is the most favorable for the brokerage. What else can a commercial bank prepare?

Tao Wen: In the retail business, we have put a lot of resources to cultivate the ability of domestic client manager for analyzing overseas investment market, in order to better serve the middle and high-end individual clients with demand for cross-border investment.

From last year to the first quarter of this year, the Bank of Communications International participated in the starting and placement of 17 projects, including Chongqing Commercial Bank, S. f International, China Chinese Medicine and so on. Recently, we’ve also carried out internal communication on how to better serve qualified high-end clients, and participated in HK IPO placement to provide a broader investment platform for clients.

21st Century: As more banks join the competition in cross-border finance, what’s the core competitiveness for a commercial bank?

Tao: The first is the international and integrated management level of a commercial bank, which determines the ability to provide corresponding cross-border products.

In terms of institution layout, emphasizing the superiority of Hong Kong as the concentration of personal offshore fortune in Asia-Pacific region, the Bank of Communications actively carries out comprehensive layout in Hong Kong and Macau covering the bank, securities, insurance and offshore private trusts and other business. In addition, as the only bank with offshore financial service license of the five large state-controlled banks, the Bank of Communications can also develop offshore financial products of private banks.

Another point is that we have higher efficiency of linkage at home and abroad and the head office has strong management over overseas institutions。 Meanwhile, we also have systemic guarantee in assessment and incentive for Ward fortune cross-border financial service, in order to further promote domestic and foreign linkage。