Beefing up its brand in China

WITH the acquisition of Hong Kong's Wing Hang Bank, OCBC now has a strong platform to grow both its geographical presence and product offering in the Chinese market.

In particular, OCBC is focusing its efforts in three main areas: wealth management services for the consumer segment; the small and medium-sized enterprise (SME) market; and the burgeoning offshore yuan market; said George Lee, OCBC's head, global corporate banking.

"The acquisition of Wing Hang has added a significant larger presence for us and given us added capabilities. The enhanced branch network allows us to accelerate our growth in the consumer business by leveraging group synergies in commercial banking, wealth management and asset management," he said.

OCBC Bank's network in China has increased from 16 to 31 following the acquisition. Of particular significance is its expanded presence in the Pearl River Delta region, one of China's main hubs of economic growth. Another branch in Suzhou is set to open by the end of the year.

The bank also has 43 branches in Hong Kong now, compared to just one previously. It has also gained 13 branches in Macau, when it had none before. The branches have all been rebranded as OCBC Wing Hang Bank.

OCBC plans to leverage on this expanded network to offer to Chinese customers its wealth management products, something that it has been traditionally been strong in. Likewise, it will also have access to a bigger base of SMEs to service.

The newly acquired deposit base will also give it a strong pool of funds to tap into the growing offshore yuan business.

"We cannot actively participate in offshore yuan if we don't have the ability to access a deposit base. With a base in Hong Kong, it allows us to engage in a lot of innovation and new product development," he said.

Close cooperation between OCBC's Singapore and China operations allows it to provide customers with timely access to yuan-denominated funds so that they can capture business opportunities as and when they arise, said Mr Lee.

Last month, OCBC extended a 50 million yuan (S$10.6 million) commercial loan to GCL-Poly out of Singapore. Based in Suzhou Industrial Park, the company is the world's leading polysilicon and wafer supplier.

OCBC's history in China goes back to 1925, when it opened its first branch in Xiamen, and it has operated continuously since then, even during wartime. The Singapore-based bank locally incorporated its subsidiary, OCBC Bank China Limited, in 2007. Prior to that, it had operated on the mainland as a branch.

OCBC Wing Hang Bank is already contributing to the group's bottom line following the completion of the acquisition at the end of July. OCBC Wing Hang's net profit contribution to the group's third-quarter results was S$38 million, after merger-related adjustments primarily in depreciation and provisions.

Mr Lee also expects increased sharing of ideas and best practices between the China and Singapore operations of the group.

"We can learn from them and they can learn from us. We want to cross-transfer each other's best practices so that one plus one equals three," said Mr Lee.

He also noted that OCBC will now be able to assist more Singapore companies wishing to enter the Chinese market, helping to build ties between the two countries in the process.

"Previously, we could only focus on the corporate sector, usually helping Chinese companies who want to venture out. But with an enhanced presence in China, we are now better equipped to facilitate Singapore companies who want to come in."