Buoyed by growing trade, a stable exchange rate and overseas demand for the currency, cross-border yuan settlements by Bank of China's domestic operations exceeded $100 billion last year. Provided to China Daily

Overseas business, renminbi settlement fueling growth

The only Chinese bank in continuous operation for 100 years, Bank of China Ltd (BOC) will continue to expand its overseas network to further develop its transnational business, said executives of the giant State-owned commercial lender.

They added that they envision BOC will become a truly world-class bank by 2020.

"Our roots in the domestic market, yet operating across borders, distinguishes BOC from its domestic counterparts," said Xiao Gang, board chairman of the bank.

"We will use both international and domestic markets and resources to accelerate development of a customer-focused, market-oriented global service system," he said.

The expansion "will enhance the bank's global services and brand value", Xiao added.

Board members have made overseas business a strategic priority, so the lender will continue to increase its number of branches worldwide while prudently considering acquisitions, the bank said earlier.

In the first half of 2011 alone BOC established more than 20 new foreign branches.

By the end of last year, BOC had 586 overseas outlets in 32 countries, as well as Hong Kong, Macao and Taiwan, with 21,100 employees.

International

Before the founding of the People's Republic of China in 1949, Bank of China had 34 branches in 14 countries or regions after establishing its first overseas branch - also the first by any Chinese financial institution - in London in 1929.

To extend its network overseas, the bank has also used agent banks.

In 1929, the bank has 17 agent banks in the United Kingdom and the United States.

As China opened up, agency relationships were developed around the world. Initially concentrated in Western Europe and Southeast Asia, the bank went on to forge ties with 1,500 agent banks in more than 180 countries and regions by the end of 2011.

Last November, BOC was selected as a global systematically important financial institution by the Financial Stability Board, becoming the first commercial lender from an emerging market to join the "too big to fail" club.

In December, the rating agency Standard & Poor's raised BOC's rating from A-minus to A, citing the "very high likelihood of extraordinary government support" in the event of financial distress.

The bank also has competitive advantages in international clearing and settlement services that facilitate Chinese business expansion overseas.

Overseas advantages

It has supported more than 1,300 projects with a combined contract value of $190 billion in 100 countries and regions.

In January, the bank announced its international renminbi settlement surpassed 1.7 trillion yuan in 2011.

It has 24 foreign institutions providing customers with renminbi settlement services. BOC (Hong Kong) Ltd handled more than 550 billion renminbi, while other overseas institutions processed more than 430 billion in Chinese currency payments.

As the largest international settlement bank, BOC is the global leader with more than 500 clearing accounts at overseas banks.

BOC (Hong Kong) Ltd and its Macao branch were appointed by the central bank as the only clearing banks for Chinese currency transactions in the two special administrative regions.

"In addition, we have more than 10,000 branches in the domestic market, which is a major advantage as the cost of establishing more branches is lower than for major foreign banks," said BOC President Li Lihui.

In addition to its efforts to serve Chinese clients expanding overseas, BOC is also gearing up to penetrate the local mainstream market.

"We expect to expand business in Asia first to enhance penetration. In developed markets such as Europe and the US we'd like stable growth in business relationships with large international companies and enter the mainstream market gradually," said a statement from the bank.

huangmengxin@chinadaily.com.cn