Bank of China (Hong Kong)
company_name = Bank of China (Hong Kong) Limited
company_type = Public
HKSE: 2388; OTCBB: BLYHK
(listing is as
BOC Hong Kong (Holdings) Limited)
slogan = Your premier bank
foundation = 2001
Xiao Gang, Chairman
He Guangbei, CEO
num_employees = 13,009 (June 2004)
revenue = HK$8 Billion (2003)
homepage = [http://www.bochk.com/ www.bochk.com]
Bank of China (Hong Kong) Limited (BOCHK, 中國銀行(香港)有限公司) is the second-largest commercial banking group in
Hong Kongin terms of assets and customer deposits, with more than 300 branches in Hong Kong. It was established on 1 October 2001 from a merger of 12 subsidiaries and associates of the Bank of Chinain Hong Kong, and listed on the Hong Kong Stock Exchangein October 2002. As of the end of 2003, the bank had HK$763 billion in assets and earned net profit of HK$8 billion in 2003.
BOCHK is one of the three banks which issue banknotes for Hong Kong, the biggest member and a founder of the
JETCOATM and payment system, and the designated clearing bank in Hong Kong for transactions involving the renminbi, Mainland China's currency. It is legally separate from its parent, Bank of China(BOC), although they maintain close relations in management and administration and cooperate in several areas including reselling BOC's insuranceand securities services. It also shares its Hong Kong headquarters, the Bank of China Tower, with its parent; completed in 1988, this was the first building outside of North Americato exceed 1,000 feet (300 m).
Bank of China Group
The opening of a branch of the Bank of China in Hong Kong in 1917 marked the entry of state-owned Chinese banks into the then-colony's banking sector. Other banks soon followed suit, starting with
Yien Yieh Commercial Bankin 1918. By the time the People's Republic of Chinawas established in 1949, there were 15 branches of state owned Chinese banks in Hong Kong, plus branches of nine Mainland-incorporated banks that were public-private joint ventures. In addition, the Chinese government established Po Sang Bankin 1949 and Nanyang Commercial Bankin 1950. Both of these were incorporated in Hong Kong.
In 1952, the nine public-private banks (namely,
Sin Hua Bank Limited, China & South Sea Bank Limited, Kincheng Banking Corporation, China State Bank Limited, The National Commercial Bank Limited, Yien Yieh Commercial Bank, Young Brothers Banking Corporation, Wo Sang Bankand National Industrial Bank of China) were grouped into the Joint Office of Joint Public-Private Banks. The Hong Kong branches of the last three of these nine were closed in 1954 when their parents were shut down by the central government, and management of the remaining six public-private banks were transferred to the Hong Kong and Macau Regional Office of the Bank of China in 1958. The Bank of China later took over management of the Hong Kong branches of Kwangtung Provincial Bank, Hua Chiao Commercial Bank Limitedand the Bank of Communications(HKSE: 3328).
In June 1975, the Bank of China moved to increase the capital of the public-private banks. As all of the new capital were from the Chinese government, private ownership in the public-private banks were substantially reduced, in some cases to less than 1%.
The 14 banks were rebranded as part of the Bank of China Group in the 1980s, after a common IT platform was established. Treasury and foreign currency exchange operations were also centralised. However, the individual banks retained their own management.
Restructuring and listing
The Hong Kong branch of the Bank of Communications broke off from the Bank of China Group in 1998. The Bank of China Group started to restructure its operations in 1999 in preparation for an
initial public offering. All minority shareholders (except for those of Chiyu) were bought out by the Bank of China. Formal plans for a restructuring received the approval of the People's Bank of Chinaand were launched in January 2001.
The restructuring saw all operations of the Mainland-incorporated group members merged into Po Sang Bank, which was then immediately renamed Bank of China (Hong Kong) Limited. Hong Kong incorporated Nanyang Commercial Bank and Chiyu Banking Corporation became subsidiaries of Bank of China (Hong Kong) Limited. Legislation was required for the merger, as Hong Kong does not allow mergers via the
pooling of interests, a common procedure in the United States. The "Bank of China (Hong Kong) Limited (Merger) Ordinance" was approved by the Legislative Council of Hong Kongon 12 July 2001, and the merger was completed on 1 October 2001.
Corporate structure and BOC Hong Kong Holdings
BOCHK is listed under the name of
BOC Hong Kong (Holdings)Limited (BOCHK Holdings), a holding companywhose principal, 100% owned subsidiary is BOCHK. The holding company is listed on the Stock Exchange of Hong Kongand as ADRs in the US under the symbol BHKLY. BOCHK Holdings is a constituent of the Hang Seng Index. The listing of BOCHK Holdings in July 2002 listing was the first international stock listing by a Mainland Chinabank; until that time, other Mainland Chinese bank listings were done in the domestic "A-share" market.
For the 12 months ended 31 December 2003, BOCHK Holdings earned HK$11.6 billion in operating income and HK$8.0 billion in net profit. As of 7 June 2006, 65.805% of BOCHK Holdings is held by
Bank of China, in turn 69.265% owned by Central Huijin Investment, an investment holding company 100% owned by the Government of the People's Republic of China.
BOCHK offers a comprehensive range of financial products and services to retail and corporate customers, similar to those offered by most commercial banks. It is primarily known for its interest-income business (taking deposits from retail customers for loans to corporates) although it has been moving into other non-interest-income areas such as personal loans, wealth management and other financial services in recent years. It has Hong Kong's biggest branch network (over 200 branches) and 450
automatic teller machines.
BOCHK is the biggest mortgage lender in Hong Kong in the secondary market;
Hang Seng Bankis the biggest in the primary market. BOCHK resells the casualty insurance, life insurance, mandatory provident fund (MPF) and asset management services of various subsidiaries of its parent, Bank of China.
Mainland China, BOCHK operates 14 branches (as of January 2005) separately from its parent. BOCHK is treated as a foreign bank, more properly, 境外銀行 ("banks outside of the territory"), for regulatory purposes as it is incorporated in Hong Kong.
Renminbi clearing bank
BOCHK has been the designated clearing bank for personal transactions involving the
Renminbi(RMB, the currency of Mainland China) in Hong Kongsince February 2004. This means that BOCHK acts as a settlement agent for RMB banknotes and funds in Hong Kong and an intermediary between banks in Hong Kong and the People's Bank of China, the central bankof the People's Republic of China. In return, BOCHK takes a 0.125% cut of all RMB deposits in Hong Kong that are repatriated back to Mainland China.
Chief Executive of Hong Kongannounced on 18 November 2003 that the People's Bank of Chinahad agreed to provide clearing arrangements, marking for the first time that the Renminbi, which is fully on the current accountbut not on the capital account, has been allowed to clear outside of Mainland China. The scope of such RMB business includes deposit-taking, exchange, remittances and RMB cards. Hong Kong banks were invited to apply to become the designated clearing bank for RMB business; the People's Bank of China subsequently chose BOCHK as the clearing bank, for a term of three years.
According to the
Hong Kong Monetary Authority, the major responsibilities of the clearing bank are to:
* open RMB settlement accounts for participating banks for the acceptance and withdrawal of RMB funds
* open a settlement account with the PBOC's
Shenzhensub-branch to centralise the acceptance and withdrawal of RMB funds of the Clearing Bank and the participating banks
* collect and distribute RMB banknotes
* provide clearing services for RMB remittances and RMB cards issued by Hong Kong banks
* provide services for the participating banks to square their RMB open positions that result from the exchange of RMB into Hong Kong dollars and vice versa.
Nanyang Commercial Bank
Founded in 1950 in Hong Kong, Nanyang Commercial Bank is a wholly owned
subsidiaryof BOCHK, with 41 branches. Nanyang primarily focuses on corporate customers, in particular small and medium sized trading and manufacturing companies. It also has a loyal following amongst the overseas Chinese community, especially in South East Asia. It relies on BOCHK for back-end office and IT support.
Chiyu Banking Corporation
Chiyu Banking Corporationand Jimei University"
Tan Kah Kee, an overseas Chinesein 1947, Chiyu Banking Corporation Limited has 23 branches in Hong Kong and focuses on serving the community of residents of Fujiandescent in Hong Kong.
Chiyu was explicitly created by Chen to create a sustainable business with profits to be devoted to education in
Xiamenand the rest of Fujianprovince in China. Since its founding, it has spent more than HK$1 billion in education in the province, primarily through funding Jimei Universityand its related schools.
JETCO (traditional Chinese: 銀通) (Joint Electronic Teller Services Limited) is the biggest network of
automatic teller machinesin Hong Kongand Macau, with nearly 1,700 cash machines. JETCO was founded by BOCHK in 1982 along with the Bank of East Asia, Chekiang First Bank, Shanghai Commercial Bankand Wing Lung Bank, and at present covers all licensed commercial banksin Hong Kong and Macau, except for HSBC and Hang Seng Bank, which has their own system. JETCO connects with the UnionPay network in Mainland China: JETCO cardholders can withdraw RMB cash at UnionPay machines in a number of major cities in Mainland China, while UnionPay cardholders can withdraw cash (up to around HK$4,500 per day) at JETCO machines in Hong Kong.
BOCHK also owns a travel agency known as BOC Travel Services. This is a legacy from its acquisition of Nanyang Commercial Bank, which ran a travel agency for the convenience of its Southeast Asian customers.
BOCHK is one of the three banks which issue banknotes for Hong Kong, the other two being HSBC and
Standard Chartered Bank. As one of the three note-issuing banks, it is also a rotating chairman of the Hong Kong Association of Banks, the main industry body of commercial banks in Hong Kong.
Bank of China started to issue Hong Kong dollar notes on 1 May 1994, under the name of "Bank of China Hong Kong Branch". Under the "Bank of China (Hong Kong) Limited (Merger) Ordinance", After the restructuring, banknotes issued by the Bank of China before its merger remained legal tender after the merger and became the obligations of Bank of China (Hong Kong). A new set of notes bearing the name Bank of China (Hong Kong) went into circulation in 2004.
Bank of China Tower
The Bank of China Tower in Central houses the headquarters of BOCHK. Designed by
I. M. Pei, the 70-storey building's height is 315 meters with two masts reaching 369 meters. Construction began in 1985 and the building was completed in 1989, with its official opening on 17 May 1990.
Bank of China Tower was the first building outside
North Americato break the convert|1000|ft|m mark, the first composite space framehigh-rise building and was the tallest building in Hong Kong and Asia from 1989 to 1992. A small observation deck on the 43rd floor of the building is open to the public; visits to the main observation deck on the 70th floor is by appointment only.
The structural expressionism adopted in the design of this building resembles growing
bamboo shoots, symbolising livelihood and prosperity. While its distinctive look makes it one of Hong Kong's most identifiable landmarkstoday, it was the source of some controversy at one time, as the bank is the only major building in Hong Kong to have bypassed the convention of consulting with feng shuimasters on matters of design prior to construction.
One of the stated goals of the restructuring of BOCHK was to aggressively improve
corporate governanceand risk management. Issues regarding BOCHK's corporate governance were widely reported in 2003 and 2004 following allegations of misconduct. Investigations are continuing as of 2005. BOCHK subsequently reorganised and tightened internal controls, and made several executive appointments via a global replacement effort.
CEOof BOCHK, Liu Jinbao, was abruptly transferred back to Beijingto become vice-chairman of Bank of China in May 2003. Investigations subsequently found Liu to have "committed economic crimes" in connection with his previous appointment as the head of the Shanghaibranch of the Bank of China. Liu was subsequently dismissed from his post. Liu, along with three other senior managers, were also alleged to have made "unauthorised distribution for personal purposes" of funds belonging to the Bank of China before BOCHK was established. " The Standard" speculated that the amount involved was HK$30 millions.
New Nongkai loan
A special committee appointed by BOC (Hong Kong) Holdings in consultation with the
Hong Kong Monetary Authorityfound that the granting of a HK$1.77 billion bridge loan to Chau Ching-ngai (sometimes referred to as "Zhou Zhengyi" depending on transliteration), involved "risks identified at the start (that) were not addressed adequately" and was granted despite "serious reservations expressed by the Risk Management Department (BOCHK)". Liu Jinbaowas criticised by the committee and a deputy CEO, Or Man-ah, took early retirement as a result.
Bank of China
List of banks
* Bank of China (Hong Kong)
* Feng, Bangyan; (2002). "A Century of Hong Kong Financial Development". Joint Publishing Hong Kong. ISBN 962-04-2129-9.
* " [http://www.bochk.com/content/89/308/1/2003_Annual_Report_e.pdf BOCHK 2003 Annual Report] ". March 2004.
* " [http://www.hkex.com.hk/listedco/listconews/sehk/20020715/LTN20020715047.htm BOC (Hong Kong) Holdings IPO Prospectus] ". August 2002.
* Chung, O. " [http://www.thestandard.com.hk/news_detail_frame.cfm?articleid=45756&intcatid=2 Liu probe began in 2000: magazine] ". "
The Standard". 10 March 2004.
* " [http://news.bbc.co.uk/2/hi/business/2978236.stm Suspect loans' at Shanghai firm] ".
BBCNews report, 10 June 2003. Retrieved 16 February 2005.
* Batchelor, M. " [http://www.iht.com/articles/2005/01/03/bloomberg/sxboc.html BOC Hong Kong hires 3 executives] " "Bloomberg" via "
International Herald Tribune". 4 January 2005.
* [http://www.thestandard.com.hk/news_detail_frame.cfm?articleid=50168&intcatid=1 Bank executives arrested over $30m fraud scandal] , "
The Standard". 20 August 2004.
Xinhua News Agency, " [http://english.people.com.cn/200408/06/eng20040806_152029.html Investigation not affecting BOCHK operating results: statement] ". Via People's Daily. 6 August 2004.
* " [http://www.bochk.com/ir/pdf/announcement_2004-08-02_e.pdf Suspension from duty of Messrs Zhu Chi and Ding Yansheng, Deputy Chief Executives of the Company] ". BOCHK announcement and press release, 2 August 2004.
* " [http://www.bochk.com/ir/pdf/announcement_2004-08-05_e.pdf Investigation of Liu Jinbao and Zhang Debao] ". BOCHK announcement and press release, 5 August 2004.
* Ling, H. " [http://www.caijing.com.cn/english/2004/040305/040305top%20bankers.htm Top Bankers Brought Down by NPLs] ".
Caijing, 5 March 2004.
* " [http://english.people.com.cn/200402/20/eng20040220_135383.shtml BOC vice-chairman sacked for suspected corruption] ". "
People's Daily". 20 February 2004.
* Hong Kong Monetary Authority press release, " [http://www.info.gov.hk/hkma/eng/press/2003/20031118e4.htm Hong Kong banks to conduct personal renminbi business on trial basis] ". 18 November 2003.
* Hong Kong Monetary Authority, " [http://www.info.gov.hk/hkma/ar2003/english/ce/ce04.htm HKMA Annual Report 2003] ".
* Hong Kong Monetary Authority press release, " [http://www.info.gov.hk/hkma/eng/press/2003/20031224e3.htm The People's Bank of China Appoints Clearing Bank for RMB Business in Hong Kong] ". 24 December 2003.
* Xinhua News Agency, " [http://www2.chinadaily.com.cn/en/doc/2003-11/18/content_282618.htm Officials hail arrangements for conducting RMB business in HK] ". Via "
China Daily", 18 November 2003.
* [http://www.bochk.com Bank of China (Hong Kong) Limited]
* [http://www.bochkholdings.com BOC (Hong Kong) Holdings Limited]
* [http://www.boci.com.hk BOC Credit Card (International)]
* [http://www.boct.com BOC Travel Services]
* [http://www.investor.reuters.com/StockOverview.aspx?country=HK&ticker=2388.HK&coname=BOC+HONG+KONG+(HOLDINGS)+LTD&mxid=100393291&target=%2fstocks%2fquickinfo%2fstockoverview&cotype=1&page=default Reuters Quote] , [http://quote.bloomberg.com/apps/quote?ticker=2388:HK Bloomberg Quote] for BOC Hong Kong (Holdings) Limited.
*Images of the 2004 issue of BOCHK bank notes can be seen at the homepage of the [http://www.info.gov.hk/hkma/new_hk_banknotes/eng/index.htm Hong Kong Monetary Authority] .
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