First Foreign-Controlled Bank In China To Open As Part Of Joint Venture Between Bank Of Beijing And ING Bank
Netherland-based bank ING Bank NV and the Bank of Beijing Co Ltd are reportedly ready to establish a joint venture firm that would essentially become the first commercial bank in China that is controlled by a foreign shareholder. According to executives of the Bank of Beijing, the board has already approved the joint venture plans, which will give ING the majority partner position.
The planned joint venture bank will have an initial investment of US$448 million. The deal will allot the Bank of Beijing a 49 percent stake in the new company, while ING Bank will have a 51 percent stake. The bank is reportedly now undergoing regulatory review and is awaiting approval.
The Bank of Beijing is literally banking on ING Bank's vast experience in direct banking and retail banking. The Dutch multinational banking and financial services firm based in Amsterdam has already successfully deployed direct banking facilities in various countries. The new joint venture bank will offer the same services, with a focus on digital banking that will cater to Chinese consumers and businesses.
Both companies will reportedly utilize the latest in financial technologies to hopefully become the benchmark that will help China's financial sector to become more open to foreign investors. The Bank of Beijing announced that the new brand will be very different from their traditional counter-based banks. The new joint venture firm will follow a direct banking model, which will use convenient e-channels to provide consumers and businesses with different financial services.
According to analysts, the decision to form a new digital-based joint venture bank is a sensible commercial move for both companies given China's rapidly evolving financial sector. ING Bank can provide their know-how when it comes to direct banking, while the Bank of Beijing can fully utilize its market position and domestic strategies. If the new bank does get approval, other Chinese institution may likely follow suit and form new partnerships with foreign firms.
Both ING Bank and the Bank of Beijing have had a good business relationship since they formed a strategic alliance back in 2005. ING acquired a minority holding in the Chinese bank and both firms have since established a partnership for various business transactions. As of 2018, ING Bank is the largest shareholder of the Bank of Beijing with a 13.03 percent stake in the company.
ING Group CEO Ralph Hamers mentioned in an interview that the partnership with the Bank of Beijing should create new business opportunities in China. This is especially true given their combined prowess in financing and banking technologies as more and more Chinese citizens and businesses transition from traditional banks to online channels.