Bank of Communications opens London branch in show of confidence

A leading Chinese bank opened a London branch on Wednesday, a move seen as a sign of confidence towards UK as a leading financial center despite Brexit uncertainties.

Bank of Communications, founded in 1908 in Shanghai, entered London initially in 1993 with a representative office, which was upgraded to a subsidiary in 2011.

Its launch with full branch status rides on a wave of booming UK China financial collaboration in recent times. The news came as high level UK and Chinese government officials met this week for the 8th UK China Economic and Financial Dialogue in London.

"Since our subsidiary's launch, we've been providing quality, convenient and efficient services to support China UK economic and trade cooperation," said Song Shuguang, chairman of the supervisory committee of Bank of Communications.

Song said the bank's early entry into London in 1993 identifies how important the UK market is.

Bank of Communications ranked 17th in tier 1 capital globally, according to 2015 statistics by London-based magazine, The Banker. The bank became listed on the Hong Kong and Shanghai stock exchanges in 2005 and 2007 respectively.

So far five other Chinese banks in London have branches. Unlike subsidiaries, branches have lending and financing capacities proportional to the bank's headquarters asset base, which gives them much greater capacity for growing service volumes.

Bank of Communications currently has 15 overseas institutions, and later this month it will open a branch in Rome and another in Paris, signaling its fast international expansion.

The bank's UK services in the future will include commodities trading, currency clearing and settlement, investment loans and trade financing.

Zhu Qin, a minister at the Chinese Embassy in London, said the growing number of Chinese banks establishing London branches "is concrete evidence that China's banking sector is steadily expanding international business, and the financial cooperation between China and the UK is growing even closer by the day."

Zhu said Bank of Communications' branch establishment will help it provide more diversified options to renminbi cross-border trade settlement, investment and financing services.

"This will be a further boost for London as an renminbi offshore center and make this city even more competitive as a global financial center," he said.

Sherry Madera, deputy director-general for the UK government's Department for International Trade, said the Bank of Communications' continued commitment to London is evidence of London's leading role as a global financial center, marked by its openness for foreign investment. It is a move "the government applauds and welcomes".

Wang Lianghua, a partner at the law firm King and Wood Mallesons, said the branch launch also demonstrates British financial regulators growing trust and understanding of Chinese banks.

He added that Brexit uncertainties could be both a challenge and opportunity for Chinese banks in the UK.

"Chinese banks need to consider how to best coordinate their UK and EU branches' strength towards an overall group strength."

"Collaboration between their UK and EU branches could face potential policy obstacles post Brexit, but effective structuring of activities can also be their opportunity to excel," Wang added.

To contact the reporter: Cecily.liu@mail.chinadailyuk.com