The Bank of Montreal (BMO) Financial Group Thursday inaugurated its first incorporated subsidiary in China, Bank of Montreal (China) Co. Ltd. (BMO ChinaCo), in Beijing, joining other rivals in the race to grab a share of a financial market boasting 1.3 billion people.
According to China's regulations on foreign banks, lenders from overseas can offer renminbi (RMB) and foreign exchange retail services to Chinese citizens, underwrite Chinese government bonds, distribute mutual funds and sell other financial products after being approved for incorporation by the China Banking Regulatory Commission (CBRC).
BMO ChinaCo's products and services are still subject to approval from China's regulator, according to a press release by the BMO Financial Group on its website.
Gilles Ouellette, President and CEO of BMO's Private Client Group, will serve as Chairman of BMO ChinaCo, which will be primarily regulated by the CBRC, the People's Bank of China and the State Administration of Foreign Exchange.
It is the first Canadian bank to be incorporated in China, as Canada and China celebrate 40 years of diplomatic relations this year.
"Canadians recognize that China's stunning economic growth offers opportunities for increased trade in goods and services that creates jobs and builds cooperation on both sides of the Pacific," said Chuck Strahl, Canada's Minister of Transport, Infrastructure and Communities, while attending a ribbon-cutting ceremony at BMO's headquarters in Beijing.
Bill Downe, President and Chief Executive Officer of the BMO Financial Group, described China as "a key growth market" for the group outside North America, saying the opening of BMO ChinaCo gave the group the flexibility to expand its product and service offerings for Canadian and Chinese clients.
"National treatment will ensure that we grow at a faster pace as China embraces financial liberalization and regulatory reform," Downe said.
"The new company gives us a clear advantage in growing our existing businesses and branch network, and capitalizing on the tremendous growth potential in China," said Albert Yu, President and CEO of BMO ChinaCo.
"With local incorporation in China, BMO joins a small number of foreign banks in providing a full suite of financial services to its customers," Yu said.
BMO ChinaCo has branches in Beijing, Guangzhou and Shanghai. After incorporation, each of these branches automatically receives a license from BMO ChinaCo's head office to operate in renminbi-denominated corporate businesses.
The number of foreign banks incorporated in China is expected to rise to 30 this year, according to a survey by consultancy and audit company PricewaterhouseCoopers (PwC) which was released in May this year.
The PwC survey of senior executives at 42 foreign banks with China operations found that these foreign institutions continued to bet on their future in China -- most of them expected revenue growth of between 10 and 20 percent from operations in the country this year.
