Over the past few years, ICBC has continued to seek full embrace of the State's "Go Global" strategy while forging ahead its domestic management on the business. ICBC leveraged on its rising international status and core strength with a constant emphasis on building worldwide service network to grow own international footprint.
Beginning from this year, ICBC takes the opportunity during this post-crisis era to strengthen its overseas network to many target markets. ICBC is on track to use its global scale to improve its multinational management, escalate its overseas presence, expand its product lines to overseas and set up a global IT platform.
ICBC is standing on a high ground to extend beyond its domestic focus.
Major Breakthrough in Global Service Network
Consistent with the strategy of placing equal emphasis on emerging and developed markets, new subsidiaries and acquisitions, ICBC has been successful in its overseas expansion. As of the end of June, ICBC boasted an initial global network comprising 181 subsidiaries strategically located within 22 countries/regions, spreading over five continents of Asia, Africa, Europe, America and Australia.
ICBC uses its competitive advantage to grow its domestic and overseas business together and increase its capability to serve customers around the world. Beginning from this year, ICBC continues to focus on building pan-regional platform across all key markets, the opening of Hanoi Branch and ICBC Malaysia, the beginning of Abu Dhabi Branch on a trial basis, the orderly consolidation in the Bank of East Asia (Canada) and Thailand ACL Bank after acquired by ICBC.
Approval has been received from overseas regulatory bodies on the opening of branches in Milan, Madrid, Paris and Brussels. Significant progress also achieved in extending the tier-2 network in overseas. That included the Red Market Branch of ICBC Macau, Daelim Branch of ICBC Seoul Branch, South District Branch in Jakarta of ICBC Indonesia.
These new branches added strength to the localization strategy of ICBC in key Asian markets.
Improved Risk Management Underpins Sustainable Development in Overseas
While spreading effect on a global scale, ICBC remains focus on the speed, scale, quality and efficiency and starts the road of "scientific development". From 2007 to 2009, the annual compound growth rates of asset, profitability and intermediary business revenue in overseas subsidiaries were 18%, 44% and 57% respectively.
Since January 2010, the scale and efficiency of ICBC overseas business have maintained robust growth and chalked up records of historic high. By the end of June, overseas subsidiaries registered a 49% increase in net profit year-on-year to 273 million US dollars while revenue generated from intermediary business rose 47% from the same period a year earlier, contributing 25% to the business revenue of overseas subsidiaries or a jump of 4 percentage points year-on-year.
Meanwhile, ICBC overseas subsidiaries have spent effort to enhance risk management and internal control and set up a comprehensive scheme, in particular on the consolidated management and reporting mechanism of liquidity risk, credit risk, market risk and operational risk. The comprehensive risk management scheme in the process of evolution has helped overseas subsidiaries to move forward amid complex conditions while at the same time mitigating their own risk exposures and avoiding the shift of cross-border risk.
At the moment, the bad asset rate and bad loan rate in ICBC overseas subsidiaries stay at 0.52% and 0.75% respectively.
The Banker and Global Finance have named ICBC Macau as the best bank in Macau for many consecutive years in honor of the Branch's stable performance and substantial strength. New subsidiaries as ICBC International, ICBC organizations in the Middle East, Sydney Branch, New York Branch post more than quintupling yr-on-yr rise in net profit. Good profit was registered in the newly-acquired ICBC Thailand, ICBC Canada and the newly-opened ICBC Malaysia. Revenues in most of the overseas subsidiaries sail above the average of their local peers. The differential management on overseas subsidiaries, or "one policy for one subsidiary", supports the overseas branches to leverage on the competitive advantage of ICBC Group in gaining local foothold and looking for unique business model to drive forward and sustain their profitability. ICBC is bringing its management in multinational operation to a higher level.
Unified IT Platform in Domestic and Overseas
While going global, ICBC moves in parallel on the set up of systems and organizations. ICBC embraces IT to increase product offerings of overseas subsidiaries, expand business and enhance risk control. FOVA, an integrated business processing system independently developed by ICBC, has been up and running in 19 overseas subsidiaries as of today, covering nearly all the subsidiaries and acquired branches in overseas.
A multi-currency, multi-lingual global IT platform across different time zones is basically in place, showing ICBC technical strength in putting all the acquired branches under the parent bank's IT platform. Meanwhile, ICBC moves forward the intensified operation of international settlement business in overseas subsidiaries.
17 overseas subsidiaries have their international L/C settlement business linked to Head Office. FOVA is the first global IT platform in Chinese banking industry with functions encompassing deposit, loan, remittance, bank card, internet banking, international settlement, trade finance, financial market under one roof and inter-connected with the domestic NOVA system.
FOVA is helping the overseas subsidiaries of ICBC to achieve automated and modernized business processing. Diversification and commonality of the products have made it possible for the overseas subsidiaries to better align with the operation of ICBC Group and offer strong IT support for overseas expansion.
Significant Results in Serving "Go Global" Enterprises and Projects
Being the largest commercial bank in China, ICBC is committed to offering best services for the Chinese enterprises to "go global", extending credit facility in all types with a value of over US$ 6 billion to 70+ "go global" enterprises by the end of June for their business covering 24 countries/regions around the world.
A total of US$ 11 billion has been arranged for financing the insurance of the export of the large full-set equipments ("421 special arrangements") included under the State. The first five "go global" industries supported by ICBC financing were petrochemical, telecommunication, transportation, machinery and trade, accounting for more than three-quarters of the financing balance.
ICBC made its own efforts in supporting the State's strategy of "export of production and import of resources". In the pipeline are the 50+ "go global" key projects in 28 countries/regions, mainly engaged in the State "go global" industries of transportation, petrochemical, electricity and telecommunication.
In August this year, ICBC, Huawei and its Indonesia partner officially signed in the framework of the memorandum for RMB overseas finance and concluded the world's first RMB export buyer's credit agreement under the framework. ICBC's overseas subsidiaries play a significant role while enhancing capability to serve the enterprises to "go global".
Many foreign banks are now the main partnering banks of their local Chinese customers.
Full Range of Product Lines for Worldwide Customers
Aided by the advanced FOVA platform and multi-license of overseas subsidiaries, ICBC actively focuses in responding to the needs of "go global" enterprises with the capability in the innovation of overseas products. Good progress has been achieved in creating nine global product lines. In terms of trade and financial service, international settlement transactions in overseas subsidiaries grow by 64% yr-on-yr in the first six months as a result of product innovation. Service capability rises further. In terms of clearing service, three main overseas clearing centers (US dollars, Euro and Japanese yen) are in place to offer safe, high-efficient and convenient clearing services in major world currencies for customers around the world. In terms of financing service, ICBC professional standard and product innovation are a boost to the blistering growth in many business areas of overseas mergers and acquisitions, project finance, bulk commodity finance, account receivable finance, export credit, syndication loan and overseas RMB finance. Projects participated by ICBC received more than 20 Best Deal awards presented by international respected magazines as Project Finance, Trade Finance. In terms of global cash management, ICBC has established relationship with over 400 multinational companies through the newly-completed new-generation global cash management system (phase I). In terms of retail banking services, initial stage of development has been achieved in the inter-connectivity of domestic and overseas accounts for individual customers and service enhancement for Elite Club accounts in overseas subsidiaries, point-to-point remittance and e-transfer between ICBC accounts. In the January to June period in 2010, overseas personal customers surged 30% from the beginning of the year. In terms of bank card and electronic banking, credit card service centers for VIP customers were successively opened in Macau, Hong Kong, Indonesia and Germany. Debit card and CUP credit card were successfully launched in Macau, Indonesia and Germany. Internet Banking was up and running in 18 overseas subsidiaries. Number of personal internet banking customers in overseas subsidiaries reached nearly 150000. In terms of investment banking service, growth of this segment in overseas subsidiaries in the first six months of 2010 rose 180% when compared to same period last year. The joint force between domestic and overseas branches will continue to evolve to reflect a cross-border investment banking business led by ICBC International. In terms of asset management, ICBC offers services for customers to invest in overseas stock through special QDII fund account. The official launch of asset custody service to overseas has also started.
International Team is Getting Stronger
ICBC is forging its own international team while escalating global presence and building up its service capacity. At the moment, ICBC has more than 4300 overseas staffs under payroll. Over 92% of them are foreign staffs. To set the stage, ICBC takes both sides of the world of "Go Global" and "Bring in" by moving staffs from home and abroad under one roof.
In two of the focus areas, one is to let the domestic staffs "Go Global". Under the plan, those of outstanding are sent to work in the overseas subsidiaries. A talent pool will be set up with the staff trained up for overseas assignment through various programs and sharing sessions. They are a strong backup for driving forward the business in overseas branches.
Another area is to bring in good staffs from overseas and employ local staffs in overseas subsidiaries to join the management team and professional staff who are familiar with the local customers to engage in product development and market expansion. In May this year, ICBC organized special training session and visits primarily for the foreign staffs to know ICBC in a close distance.
The move is to let them join the ICBC family and proud to be an "ICBC person". One foreign staff said after the visit to Shanghai Data Center and understood the IT strength of ICBC, "In the past I knew ICBC is the world's largest bank by market value and the most profitable. Today, I see the progress of ICBC is backed by the Bank's mastery of IT.
I feel that ICBC deserves the name. Being an ICBC person, I feel very proud".
Currently, ICBC is best-positioned in every aspect, branch network, IT platform, scale & efficiency and multinational management. The infrastructure, overall framework, management and operation mechanism for overseas development are basically in place. Some overseas subsidiaries with strong performance have their own business model.
They are the base for ICBC to extend global reach. An executive with ICBC said, the internationalization drive of the Chinese banks is a result of the globalization of Chinese economy. In the next step, ICBC will continue to follow the State strategy of "go global" from a strategic high perspective.
ICBC will manifest its role as a large state-owned bank to offer all the financial services and look for solutions to serve the global capitalization of Chinese industries along with the same line in financial. ICBC is stepping up to serve customers worldwide and the internationalization of products.
The aim is to build a strong international presence in line with the "go global" customers.
