China Minsheng Banking Corp. (1988)’s Hong Kong branch plans to triple its assets over the next three years as it branches out from trade finance to merger advisory services and wealth management.
Total assets at the unit, which began operations a year ago, will grow to more than HK$100 billion ($13 billion) in three years, including off-balance-sheet items, Lin Zhihong, the Beijing-based lender’s chief executive officer for Hong Kong, said in an interview March 15. The figure stood at HK$33.2 billion at the end of last year.
Mainland China’s first privately owned lender joins larger rivals in establishing a presence in Hong Kong as Chinese companies step up international trade and seek acquisitions overseas. With a team of bankers hired from Piper Jaffray Cos. the bank will target the entrepreneurs starting to follow bigger state-owned enterprises in buying assets abroad, Lin said.
“Trade financing is our bread and butter,” Lin said. “Next we will focus on helping Chinese private businesses expand outside China by mergers and acquisitions. Private banking and asset management is our third step.”
Shares of Minsheng rose 1.4 percent to HK$10.26 as of 9:37 a.m. in Hong Kong trading, widening their gain this year to 14.3 percent. That compared with a decline of less than 0.1 percent in the city’s benchmark Hang Seng Index today.
Minsheng’s 2.59 trillion yuan ($417 billion) of assets included 250.7 billion yuan of loans to small and micro enterprises at the end of the first half of 2012, or 19 percent of the bank’s total lending. Minsheng “will be selective” in pursuing business from “blue-chip” companies, Lin said.
Industrial & Commercial Bank of China (601398) (Asia) Ltd., the Hong Kong unit of the world’s largest lender by market value, already had more than four times Minsheng’s targeted assets at the end of June, with HK$424.8 billion. BOC Hong Kong Holdings Ltd. (2388), the largest Hong Kong unit of a mainland lender, had HK$1.68 trillion.
Minsheng’s investment banking unit in the city may receive approval this year from the China Banking Regulatory Commission and regulators in Hong Kong, Lin said. The division recruited a team of 20 people from Piper Jaffray in Hong Kong, boosting the total number of Hong Kong staff at Minsheng to about 120, according to Lin, who plans to increase staff to 500 in the next three years.
Chinese companies announced $82.6 billion of cross-border acquisitions last year, compared with $90 billion in 2011, data compiled by Bloomberg show. The National Development and Reform Commission, China’s economic planning agency, this month set a target of 8 percent growth in trade for 2013. Exports advanced 7.9 percent in 2012 and imports rose 4.3 percent.
Minsheng’s private banking unit in Hong Kong may get the needed licenses “soon,” and will target customers with assets of HK$10 million or more, said Lin.
China, which has the second-highest number of high net worth individuals in the Asia-Pacific region, saw its population with investable assets of $1 million or more climb 5.2 percent to 562,000 in 2011, RBC Wealth Management and Capgemini SA said in a September report. China’s rich had $2.71 trillion of investable wealth in 2011, accounting for 25 percent of the region’s total.
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