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ING to expand deeper into China
ING plans to double its client base in China over the next few years, while expanding its wholesale banking business in Australia - as it remains on track to have revenue from its wholesale banking operations in Asia-Pacific make up 20 per cent of the group's wholesale business franchise in three to five years, up from 15 per cent now, said a top executive.
ING also expects to build up its financial markets business to serve non-banking institutions such as insurers and asset managers, said Gerrit Stoelinga, who was appointed CEO, Asia, of ING wholesale banking, last year. Having spun off its insurance and asset management businesses, the bank now has free rein to engage such financial players in fund-raising and cash management.
"Our profile has been of incremental growth. We feel that we would like to accelerate that growth, and continue to do what we have already done well," Mr Stoelinga told The Business Times in an interview.
While trade tensions between the US and China are still on investors' minds, banks are benefiting from, in fact, the pick-up in trade flows. "Being small countries, we tend to look at the big wide world as export markets. The similarities and perspective of the Singapore government and Singapore companies are very much the same as Dutch governments and Dutch companies," said Mr Stoelinga, referring to the Netherlands and Singapore, when asked about trade tensions between the US and China.
"It's very difficult to read Mr Trump. I wouldn't claim any insight into that. But what I do see is the response of the world. People in Singapore, Europe, and Netherlands, they continue to promote free trade. I don't think we can manage it (trade tensions), we'll just have to deal with it. Like any bank, we are an interested observer."
Growth is also spurred by the One Belt One Road ambitions spelled out by the Chinese government, as Chinese companies are urged to look to expand their businesses beyond their home turf. But ING can edge ahead of Chinese banks in serving Chinese clients, given ING's specialist knowledge in areas such as structured finance and natural resources.
Infrastructure financing in itself is a specialised craft. For one thing, while infrastructure projects typically generate local currency revenues, the investments are in foreign currency, noted Mr Stoelinga, who was previously global head of structured acquisition finance at ING. Such long-term projects have also to be backed by projected supply and demand - these don't necessarily match naturally.
As most countries commit to the Paris Agreement to address climate change, there are businesses looking for banks that can provide specialised financing based on sustainability practices. In April, ING led a one billion euro (S$1.55 billion) syndicated loan to Philips, which has an interest rate tied to the manufacturer's sustainability performance and rating, taking in social, governance, and environmental impact of the borrower's business.
In China, where the Dutch bank has been for more than 30 years, it would raise its coverage in parts of Hong Kong, Shanghai, and Beijing. The 600-strong staff in Singapore, which focuses on regional sector lending, will also benefit from a jump in activity and coverage.
Broadly, there is "substantial overlap" between the market coverage that Asian investors are interested in, and ING's global network, said Mr Stoelinga, who is now based in Singapore. ING in Asia alone has presence in 14 markets.
Notably, more Asian investors are interested in Europe, he added, with the bank seeing demand to invest in parts of Spain, the Netherlands, and Germany. Parts of this demand are driven by diversification needs, to spread risks across parts of Europe, following the Brexit vote. "A lot of people are just scratching their heads. So are we," said Mr Stoelinga, referring to questions over the impact of Brexit.
"It's not easy to read what's going to happen. We do feel that some of our customers are keen to secure their entrance and their gateway into the European market. They are considering moving HQs from UK to other European markets."
There is also Asian interest in Australia, where the amount of infrastructure development is enormous, said Mr Stoelinga, referring to businesses such as data centres, utilities, and power stations. ING is currently the fifth-largest retail bank in Australia, ranking only after the Big Four of the domestic Australian banks.
The bank led Australia's largest M&A transaction last year, as it arranged with a few project finance banks, the A$12 billion (S$12.6 billion) acquisition of 50 per cent of state-owned electricity infrastructure company Ausgrid.
ING is watching the developments in blockchain keenly, having completed its first transaction selling crude oil cargo from Africa into China using blockchain technology which significantly reduced the operating time. Yet, while the opportunity from blockchain is huge, it will also take time to be applied in the age-old art of trade finance.
"It's the complexity of trade. There are so many partners and so many jurisdictions. You need to ensure that the technology you apply is also valid in every jurisdiction," he said. "But it's clear to me that trade finance as it is today is based on 17th century concepts, with bills of lading and LCs (letters of credit). We're living in the 21st century now, and it's time to acquire modern technology."