Bank of Communications opens branches in Europe

A pedestrian walks past a branch of Bank of Communications in Yichang, Central China's Hubei province, on Jun 12, 2016. [Photo/IC]

Bank of Communications Co Ltd, China's fifth largest commercial lender by assets, announced on Thursday it will open three branches for business in Luxembourg, Rome and Paris in November, following the opening of a branch in London on Wednesday.

The bank will also complete its acquisition of a controlling stake in the midsize Brazilian bank Banco BBM SA this month, which is the first step for the bank to expand its business in Latin America.

When this expansion is complete, the bank will have 20 overseas branches in 16 countries and regions. Currently, it is waiting for Canada's regulatory approval for the establishment of a branch in Toronto, after getting the green light from China's banking regulator. The bank will further accelerate the construction of its global network by launching branches in the Czech Republic, India and South Africa.

"Overseas branch development is an important part of our bank's transformation, as net interest margins keep shrinking," said Wang Jiang, vice-president of Bank of Communications. "We're trying to provide cross-border, cross-sector and cross-market comprehensive services through the expansion of our global network."

As of the end of September, total assets of the bank's overseas institutions reached 791.76 billion yuan ($116.2 billion), accounting for 9.78 percent of the total assets of the bank and its subsidiaries. The net profit of its overseas institutions increased by 25.35 percent year-on-year to 4.09 billion yuan.

Large Chinese banks are speeding up their global expansion amid intensified domestic competition and a transition of the banking sector, along with increasing demands for overseas mergers and acquisitions by Chinese companies.

The Industrial and Commercial Bank of China Ltd, the nation's largest commercial lender, opened a branch in Brisbane in September, which is the bank's fourth branch in Australia. During the same month, Bank of China Ltd became the first Chinese bank licensed to conduct banking operations in Mauritius with the opening of a subsidiary in that country.

Tian Guoli, chairman of Bank of China, said at a global M&A summit on Tuesday: "As the cross-border M&A by Chinese companies has entered a new stage, it is pushing forward the transformation and upgrading of China's financial sector."