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Friday, October 13, 2017, 11:03
Banking it all on the old credentials
By Evelyn Yu in Hong Kong
Friday, October 13, 2017, 11:03 By Evelyn Yu in Hong Kong

ICBC (Asia) chief Gao Ming is on a new mission in HK. She tells Evelyn Yu that capturing a broader Asia Pacific market and helping its clients ‘go out’ shouldn’t be a Sisyphean task.

Gao Ming, chairman of ICBC (Asia), says the group is making big inroads into investment banking with concern of both its longstanding and new customers. (PARKER ZHENG / CHINA DAILY)

With just eight months at the helm of the overseas flagship unit of one of the Chinese mainland’s “Big Four” lenders — the Industrial and Commercial Bank of China (ICBC) — Gao Ming aims to bring back the stewardship and expertise with which she had made her mark during her time as the bank’s chief representative in Europe a decade ago.

Gao, who took up the chairmanship of Hong Kong-based ICBC (Asia) in February this year, has now set her sights on capturing a much broader market in the Asia Pacific region in tandem with its clients’ going global strategy.

Just days before she came to China Daily’s interview, ICBC (Asia) announced its interim results for the first half of this year. Its after-tax net profit went up HK$73 million — 2.07 percent year-on-year — to HK$3.615 billion.

The lender’s deposits and loans businesses both saw strong growth during the period, surging by more than HK$60 billion.

A commercial bank is an important part of a city. It’s closely knit with its citizens’ lives and evolves along with the city’s change of the times

Gao Ming, chairman of ICBC (Asia)

Gao’s formula is to get the bank adapt itself to the persistent fluctuations in the world financial markets, steering the company away from troubled waters into bigger non-interest-related operations to help it cope with the ever-narrowing net interest margins.

For the 2017 first-half, ICBC (Asia)’s net non-interest income came to HK$1.161 billion, accounting for 20.44 percent of its total operating income.

“We’re in the transition from the traditional deposits and loans business; we will strengthen our non-interest operations as the company aims to expand its fee-generating businesses, including advisory, asset investment and investment banking. We seek to raise our non-interest business from 20 percent to 30 percent within three or five years,” says Gao.

ICBC (Asia)’s goal to boost its investment banking portfolio, however, seems to overlap that of ICBC International — the investment banking arm of ICBC in Hong Kong. ICBC (Asia) boasts having the financial services license its investment banking counterpart longs to have as a sponsor of initial public offerings.

But, Gao poured scorn on the suggestion that the two entities are duplicating each other’s work.  

“We’re expanding into investment banking with concern of our clients. We want to provide all-round services to our customers, and if our longstanding clients, who have been getting loans from us, have other needs, be them bond issuance, tending to mergers and acquisitions or anything of that sort, we’re here to help them out as well.”

Shot in the arm

Gao’s credentials have come a long way in helping her win greater recognition among Asia’s banking circles. Back in 1996, her career got a shot in the arm when she was awarded the honor of the “Best Banking Employee” by the Hong Kong Institute of Bankers — the first banking executive from the Chinese mainland to have racked up the accolade.

ICBC (Asia) embraces the push by prominent mainland business and financial institutions to “go out” — a campaign that has been accentuated by the nation’s high-profile, mammoth Belt and Road Initiative.

“We’re actually following our clients’ steps in our expansion program,” explains Gao. “Chinese-funded enterprises do have a high bidding rate in infrastructure projects in the countries associated with the Belt and Road project. We’re happy to see many Chinese-funded enterprises having won various projects in places like Australia, New Zealand, Malaysia and Indonesia.”

On the heels of a string of high-profile, multibillion-dollar acquisitions by mainland companies, the mainland authorities have moved to put the lid on domestic enterprises’ overseas investments in the property, sports, entertainment and other fields.

But, according to Gao, ICBC (Asia) has been less hit by the new regulation as most of its clients are players in the energy, electricity, telecommunication and infrastructure sectors. “Those are industries that serve as pillars of the national economy, they’re counter-cyclical and have lower risks.”

In April last year, ICBC (Asia) secured the green light from its parent company for its loan business to proceed in the Asia Pacific in addition to Hong Kong and the Chinese mainland. In the first year of its establishment last year, the lender’s Asia Pacific division secured loan commitments exceeding HK$20 billion, with a HK$14-billion loans drawdown from clients across the region. 

Solid footprint

Allied with its affiliates in the Asia Pacific, Gao says ICBC (Asia) has planted a firm footprint with regard to syndicated loans for major projects. The support it has gained from the parent company — the world’s biggest bank in terms of total assets — is ICBC (Asia)’s biggest differentiator among its competitors in Hong Kong, she says.  

Its asset management subsidiary, ICBC (Asia) Investment Management Company Ltd, has also seen its assets under management having more than doubled — from HK$20 billion at the beginning of this year to more than HK$50 billion as of August.

“We have six unit trusts authorized by the SFC (Hong Kong’s Securities and Futures Commission) — three equity funds, two bond funds and one a balanced fund. We also have a number of discretionary accounts for institutional clients, including QFII/RQFII accounts, QDII accounts, as well as a few private equity funds. The average return of equity units trusts is above 20 percent and 4 percent for bond unit trusts year-to-day.”  

In her new role, Gao further plans to up the stakes in retail banking in Hong Kong.

“On the mainland, our parent company has 5 million corporate clients and 500 million individual clients. But, in Hong Kong, our market share of retail customers is only in the single digits. We’re resolved to lift that to double digits in the short term.”

Gao, nevertheless, admits that attaining that target is a challenging, though not an impossible task.

It takes time for a commercial bank to accumulate local customers — a disadvantage compared with some of its rivals, which have been serving Hong Kong for more than a century — she argues.

Gao is very passionate about the vision though. “A commercial bank is an important part of a city. It’s closely knit with its citizens’ lives and evolves along with the city’s change of the times.”

Putting the ICBC brand on the European map

Banker Gao Ming is widely credited with having put ICBC on the European map, having played an instrumental role in steering the lender back on a sound track in the aftermath of one of the most stunning financial crises to engulf the European continent.

Before taking the helm as chairwoman of ICBC (Asia), she was with ICBC (Europe) over an eight-year span from 2007 to 2015, right after the European debt crisis which saw some of the wealthiest European nations mired in economic malaise.

Gao’s stint in Europe started off with a small presence of only one ICBC office in Luxembourg. Under her leadership, the bank quickly expanded its footprint in the new market, culminating in the opening of five offices across Europe within a week in 2011 — in France, Belgium, Holland, Italy and Spain.

“The whole of Europe was then clouded by anxiety and uncertainties and we brought confidence to the local with the launch of five offices in a week,” recalls Gao.

“Every cloud does have a silver lining,” she professes, pointing to the fact that amid the debt crisis, major European banks were seriously affected, while some big local enterprises which, nonetheless, were less affected. “But, we took the opportunity and provided the financing needed by these enterprises.”

Sparked by the US subprime mortgage crisis, the European debt cataclysm erupted in late 2009 with multiple European countries, including Greece, Spain, Ireland, Portugal and Cyprus, defaulting on government debt payments and dealing a hard hit on local banks.

When Gao began her stint with ICBC (Europe) in 2007, total assets amounted to 100 million euros. It saw explosive growth of up to 25 billion euros by the time she left the office in 2015. It also expanded from one office in Luxembourg to 15 entities, covering nine countries across the region.

The “Luxembourg model”, which was used to extend the bank’s operations to European countries using Luxembourg as the gateway, was quickly adopted by other Chinese commercial banks. “After us, there were seven or eight Chinese commercial banks which set up offices in Luxembourg before venturing into other markets,” says Gao.

Closer to home, she says the parent company took a dual listing in Shanghai and Hong Kong in 2006. It was then the biggest initial public offering on the Hong Kong bourse. “The flotation worked well for our branding and we soon earned the trust of local clients. The strengthening of the yuan then also lifted our economic strengths.”

Since 1989, Gao has amassed more than 28 years’ experience working for ICBC.

“I started working for ICBC in its international business division. The past decades have seen the bank expand rapidly on a global scale, bringing new challenges each year. I’ve gained a lot from the international exposure and I hope my employees can reap the same benefits.”

To nurture young talents, Gao says she would try to give them proper international exposure to help them ascend the career ladder.

“We hope ICBC can serve as a grand stage for each of our employees to grow.”

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