Netherlands-based ING Bank, part of ING Group, is winning more Chinese corporate clients by providing them with unique financing opportunities with its European heritage.
To focus the business on providing its specialized products and services to corporate clients, the bank has sold the insurance and investment management assets in Greater China during the last two years.
It also focuses on commercial banking business but has maintained its access to China’s retail banking by holding a 13.6% stake in Bank of Beijing.
During an interview with FinanceAsia, Robert Scholten (S), country manager of Greater China with ING commercial banking, and James Poon (P), a managing director and head of China and Hong Kong corporate clients, talked about how the bank is riding on the “going global” tide and the booming financing needs of Chinese companies. The following Q&A is based on edited excerpts from the interview.
Q: Can you briefly introduce your China business and its growth?
S: ING Bank has established its commercial banking business in China for more than 20 years and developed into a pure commercial banking franchise with investment banking capability. Having a total of more than 200 staff in Greater China, our bank has set up four strongholds in the region and is in the process of upgrading the Beijing representative office into a branch office.
For ING, Asia commercial banking contributes 13% of global commercial banking profit before tax and commercial banking globally is about half of total bank profit before tax. Greater China is one of its key markets, in addition to Japan and South Korea, which will contribute to the growth.
The operating profit growth for China had well exceeded 10% in the past few years. We expect it to remain at the same pace in the next five years with China corporate investments in Europe continuing to soar going forward.
Q: How do you differentiate your bank with other foreign banks? What’s your focus?
S: ING Bank is different from other banks because it is a true pan-European bank with strong Dutch heritage. We are one of the largest banks in the Benelux area [--Belgium, Netherlands and Luxembourg--] and have an extensive international network across more than 40 countries; we are the third largest retail bank in Germany.
As a foreign commercial bank, you don’t need to have large networks everywhere. You need to know that you will never compete with supermarket banks such as ICBC [in China] anyway. So you need to focus and understand which is best for you and for your clients.
What we are trying to do in Asia is to be a commercial bank focused on a product set that we are strong at, such as trade and commodity finance, cash management, structured finance, financial markets, corporate finance advisory, debt capital markets, etc. We also make sure the cooperation among our different units globally or regionally works well.
Our strength is that we specialise in some products such as commodity finance, which was originated in our home market and spread to the other markets. The best example is Bank Mendes Gans, one of ING Bank’s subsidiaries, which was mandated in January to provide a global liquidity management solution to China International Marine Containers, a shipping container producer and a logistics company, and also an old friend of our bank.
As to industries, we have expertise in sectors such as natural resources, utilities, transportation, TMT and manufacturing.
Although we've only set up four offices or branches in Greater China, we have won the top four market leaders [as clients] in each industry we specialise in.
Even within the SOEs, we have a focus. We look at those entities of the massive SOEs where we can truly add value, some areas such as straight-forward lending support or more structured value propositions.
Q: Who are your clients and what new business opportunities do Chinese companies bring to you along with the “going global” trend?
S: We basically have four sets of clients: large SOEs in China, multinational companies from Europe, commodity traders as well as bank and non-bank financial institutions.
The existing client portfolio is 60% from Chinese corporates and 40% from HK and international corporates. Among the Chinese corporates, the split between SOE and POE is 80%/20%.
We see more and more Chinese companies, just as Japanese and Korean companies did earlier, are expanding overseas. During the past five years, a lot of our core clients have looked to acquire technology and brands, as well as gain market share and diversify revenues away from the home market. We have advised on some of the transactions.
Also, there is increasing demand for renminbi business from our clients in Europe.
Q: How do you build up relationships with Chinese companies?
S: When we start a relationship with a new client we normally start with offering a bilateral loan facility or a participation in a syndicated loan first. Gradually we deepen the relationship with other products. The purpose of this is for us to get to know each other and build on the relationship to capture repeat business and partnership opportunities.
P: As a foreign commercial bank, we really focus on a long-term, mutually coordinated relationship with our clients and in a sense we build deep trust.
One of our core competencies is lending. Even in general lending, we are very professional and efficient in the execution. For example, one of our existing clients was in urgent need of funds within 10 calendar days, a very short time for a bank in most circumstances. But the client and we have known each other for many years and they trust us can help. Within nine days, our team had efficiently completed all execution work from term sheet to credit approval.
[Our clients think of us so much that] some of them even act as the reference to our new clients, because they trust us and have trust in our products.
The core managers in China have worked together for ING for decades, and we have rooted in the market deeply with various resources. Robert and I also act as chairmen for some business organisations, which will add more exposure for the bank and opportunities for us to approach Chinese companies.
