x Abu Dhabi, UAESunday 23 July 2017

NBAD and Emirates NBD make a move on China

NBAD and Emirates NBD are to open offices in mainland China for the first time, as the Emirates seeks to profit from growing trade links with the world's second-biggest economy.

China has eased restrictions on investments in lenders, paving the way for the entry of UAE banks. Above, Shanghai's financial district. Philippe Lopez / AFP
China has eased restrictions on investments in lenders, paving the way for the entry of UAE banks. Above, Shanghai's financial district. Philippe Lopez / AFP

Two of the UAE's biggest banks are to open offices in mainland China for the first time, as the Emirates seeks to profit from growing trade links with the world's second-biggest economy.

National Bank of Abu Dhabi (NBAD) and Emirates NBD are opening offices in China, as the two countries forge closer ties after a visit by Wen Jiabao, the Chinese premier, to the Emirates this year.

Emirates NBD, the biggest bank in the UAE, is preparing to open an office in Beijing, becoming the first bank in the Middle East to operate in the Chinese capital, said Kevin Flannery, the general manager of international business at Emirates NBD.

"Our imminent presence reflects our confidence in the China growth story and we expect a significant business enhancement as a result of this office," he said. "After some time, we will be reviewing our presence and may seek to invest further into China."

This week, NBAD opened its office in Shanghai, intended to complement existing operations in Hong Kong.

"This shows how NBAD is seeing itself as the conduit of business between the Far East and the rest of the world," said a spokesman for the bank.

China was the UAE's fourth-largest trading partner last year, with commerce between the two countries totalling an estimated US$20 billion (Dh73.46bn), according to Eurostat.

Other UAE banks are also moving in to target growth opportunities in China, which Goldman Sachs predicts will eclipse the United States as the world's largest economy by 2027.

UAE banks' entry into the Chinese mainland comes as the China Banking Regulatory Commission eases restrictions on investments in lenders, allowing qualified companies to buy shares through private placements, share subscriptions or mergers and acquisitions.

"Despite over 200 branches and subsidiaries operating in China, foreign banks remain a small presence, with assets less than 2 per cent of the total," the IMF wrote in a research report on China in April. "The Chinese system is evolving from a system of state ownership to more private ownership, opening up the possibility of more complex ownership structures for banks."

For their part, Chinese banks have taken a more active role in expanding in the Gulf, with ICBC Middle East doubling its lending during last year compared with 2010.

Union National Bank, an Abu Dhabi-based lender, was first into mainland China with a representative office in Shanghai, which opened in 2007.

Last month, the Dubai International Financial Centre signed an agreement with the China Banking Regulatory Commission to cooperate in cross-border supervision of the financial sector.

The DIFC is also seeking to develop Dubai as a regional trading hub for the Chinese yuan.

Emirates NBD this year pioneered sales of yuan-denominated bonds in the Middle East, with the bank expecting greater numbers of Middle Eastern companies seeking to raise financing in the Chinese currency.

The so-called "dim sum" issuance raised 1bn yuan (Dh576bn) in March.

International banks including HSBC, Industrial and Commercial Bank of China and Standard Chartered have sought to tempt Middle Eastern companies with accounts denominated in yuan.

China has also opened in Abu Dhabi and Dubai branches of the Confucius Institute, a non-profit organisation that promotes Chinese language and culture.

ghunter@thenational.ae

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