Bank of China wants to be the “bank of first choice” for RMB deals

Bank of China, Colombo Branch Country Manager Wang Chuan

• Newly set up Bank of China, Colombo Branch Country Manager Wang Chuan shares plans and key insights 

Bank of China, Colombo Branch Country Manager Wang Chuan in an interview with Catherine Weerakkody says the development of Port City will offer new opportunities for many other financial institutions to open branches in Sri Lanka. “I believe that our entry here as the fourth largest bank in the world would encourage many other key international and regional players to move into Sri Lanka, particularly to the Port City in the time to come,” he says. Following are excerpts from the interview:

By Catherine Weerakkody

Q: Bank of China is now the 4th ranked bank in the world and is opening its first branch in Sri Lanka. What are the main factors for choosing Sri Lanka? What are the possible incremental gains?

A: Besides the traditional, historical, cultural and close friendly relations that have always existed between China and Sri Lanka, there were many factors for selecting this country. Sri Lanka, with its unique geographic location with potential to develop as a transport and financial hub between West and East Asia, is a key member of the Belt & Road initiative of China.

There are also very strong trade and investment relations that have always existed between our two countries where China is among the largest trade partners and also major source of tourists to Sri Lanka. Despite all this there were no Chinese banks in Sri Lanka. So this opening would do much more to further boost bilateral trade and commercial links.  

Further, China is also the largest investor in Sri Lanka with substantial debt and equity components mainly flowing in as long term investments offering us many opportunities to get actively involved at every stage of the disbursement process. 

The volume of Sri Lankan exports to China is significant but there is much room for improving the range and the value and we plan to work with trade chambers, export development agencies and exporters themselves in achieving these higher levels. 

The development of Port City will also add impetus to all this and offers more opportunities for many other financial institutions also to open in Sri Lanka. I believe that our entry here as the fourth largest bank in the world would encourage many other key international and regional players to move into Sri Lanka, particularly to the Port City in the time to come. 

Q: Did the bank face any challenges in the process of setting up a branch? If so, how should the process be improved?

A: I am happy to say that we did not face any major challenge as such. On the other hand we were able get a lot of support and understanding from Sri Lankan authorities and regulators, particularly the Central Bank. I believe they too saw the need for a major Chinese bank to open here. 

Q: What products will the bank offer and how will it be different from the other competitors?

A: It is envisaged that we would be involved in funding some of the large scale infrastructure projects in Sri Lanka and offering them the needed banking facilities. 

As for other banking products, I don’t see a major difference in the type of products and services that we would be offering but I expect to see some differentiation in our transactional and delivery methods. For example, we would be in a better position to transact in RMB, the Chinese currency which is also one of the Reserve Currencies recognised by the IMF. This would eliminate the exchange risks faced by Chinese exporters leading to lower prices for importer benefitting all parties. Also, very often the Chinese counterpart to a transaction is likely to already be a customer of our bank leading to reduction in the intermediation time and banking charges. 

We believe we will have a critical role to play in speeding up the process, bringing down intermediary costs and reducing foreign exchange risks faced by popularising the use of RMB. 

Q: How will the bank adapt to the local culture?

A: I do not see this as a major challenge. Bank of China has been operating overseas branches since 1929 when we opened the first branch in London. Now we are present in 54 countries and regions and the bank has adapted itself well to each local situation. Our Head Office too have always encouraged and supported these moves. Even in Sri Lanka we have recruited the right mix of staff to meet the different needs and I am confident that this would not be an issue. 

Q: What are the benefits that Bank of China will bring to the local economy in terms of best practices, latest technology and financing tools?

A: As for new technology and practices, we will be introducing the same new technology currently being used in China as well as in our branches worldwide. Other than that, the many benefits already explained under the previous Questions would accrue to customers. 

We would also provide opportunities for local exporters and industrialists in the SME category to obtain exposure to the Chinese markets through regular business exchange programs.

Q: Did the bank face any difficulty in finding local talent? 

A: There was no difficulty in this area. From the outset we had a clear idea of the scope of our involvement and the risk levels to assume. That permitted us to decide on the staffing levels and the skills, knowledge and the attitudes we needed to look for in the selected candidates. In our efforts we were strongly supported by the HR Consultancy that we engaged.

Q: What is the bank’s strategy to overcome challenges and ensure growth is sustainable?

A: We would be engaged in assisting major infrastructure development projects in Sri Lanka including those undertaken by the Chinese contractors and also the trading and the manufacturing sectors. This would of course be supplemented by local customers having extensive dealings with China by introducing them to our Trade Finance services specialising in Renminbi (RMB) transactions.

We would also be targeting the local SME/Corporate Segment, where in addition to the traditional forms of financing we would assist them to upgrade their work processes and skill levels through International Partnership Building and Investment Promotion Programs linking them up with Chinese enterprises. Such partnerships could even lead to higher levels of private investments flowing into the SME Sector. Similar approach would be adopted to assist the Sri Lankan exporters to enhance their export volumes to China by providing greater access and exposure to Chinese buyers. 

We are confident that all this would provide sustainable returns in the medium/ long term. 

Q: Where do you see the bank in the next five years?

A: Through our proposed activities, by this time, it is envisaged that use of RMB for trade finance and other cross border transactions would have become more common making dealings with China in RMB a very routine matter making us the “Banker of First Choice” when it comes to RMB transactions and settlements. 

We would also look very positively at encouraging more investments to Sri Lanka particularly to the Special Economic Zone of Hambantota and Colombo Port City and we would also be prepared to open more branches in keeping with the needs of Sri Lanka.

On this basis I foresee Bank of China getting even more involved in the economic activities of Sri Lanka, benefitting all the stakeholders. 

(The writer is a freelance journalist, an associate member of CIMA (UK), a graduate in Financial Management (UK) and has a Master’s degree in Financial Analysis (UK). She is currently working as an investment analyst for a MNC.)