Guangzhou government investment arm puts pressure on Chong Hing Bank to expand faster in mainland China
Management at Hong Kong-based lender says expansion outside Guangzhou will be slower
A rift between management and controlling shareholder has spilled into the open at Hong Kong-based lender Chong Hing Bank, with management under pressure from Guangzhou city government investment vehicle Yuexiu to expand faster in mainland China.
Management at the bank, in which Yuexiu bought a majority stake two years ago, has said it needs to slow down its expansion due to a more challenging mainland operating environment.
Analysts have expressed doubt as to whether business referred from Yuexiu would be sufficient to sustain a strategy to take Chong Hing national.
Yuexiu and Chong Hing chairman Zhang Zhaoxing said at the opening ceremony for Chong Hing’s new Guangzhou branch on Monday that the bank was just a year or two away from acquiring local incorporation status on the mainland, and when it did so, there were plans in the works to take the bank national.
The macro environment has become tougher both for Hong Kong and Chinese financial institutions
“With the support of the sister businesses [under the Yuexiu umbrella], the potential of Chong Hing Bank in China is tremendous … Guangzhou as a core city in China’s economy has a strong economic foundation,” Zhang said. “The overall ecosystem is healthy for developments. Under the city government’s support, financial services have enormous opportunity here. Chong Hing Bank will speed up product innovation and bolster its risk management capability and gear up for national expansion.
“Under the mayor’s instruction, he said he doesn’t care about anything else. The bank must set up in Beijing and Shanghai in two years. We will fight for establishing national coverage and position the bank as an internationally competitive Asia-Pacific player. Yuexiu is focused on supporting the growth of Chong Hing Bank with our available resources. We are grateful for the mayor’s support.”