Foreign banks see advisory role abroad
Print Edition
Foreign banks on China’s mainland aim to develop their advisory role outside the country and they will be helped by Chinese companies expanding overseas, Ernst & Young said yesterday.
About a third of the foreign bank respondents believed that corporate advisory services will increase significantly as Chinese companies continue to expand globally through acquisitions and overseas ventures, according to survey which interviewed 38 foreign bank chief executive officers and senior executives between July and September last year,
In the survey, the foreign bankers also hoped that the government will revise crucial regulations such as the foreign debt quota and the loan to deposit ratio.
The top revenue drivers for the banks last year were corporate lending and trade finance. But they will not place the same emphasis on corporate banking going forward as China’s interest rate liberalization has already started to erode margins. The bankers also see trade finance as benefiting from the yuan’s internationalization, EY said in a report.
There are currently 42 locally-incorporated foreign banks, 95 branches, and several hundred representative offices of foreign lenders.
The foreign banks saw asset expansion slow sharply from 24 percent in 2011 to 10.7 percent in 2012, and it is seen to further weaken last year as only 13 out of 33 respondents predicted their asset growth to be above 10 percent, with the rest being less optimistic.
Foreign banks’ total assets were worth 2.3 trillion yuan (US$376.8 billion) by the end of 2012, and their after-tax profits amounted to 16.3 billion yuan.
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