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SHANGHAI: Singapore's DBS has unveiled plans for its expansion in China - just days after becoming the first South East Asian bank to receive approval to incorporate locally in the country.
The approval means that DBS Bank (China) will be able to offer a full array of yuan-denominated mass-market banking services to Chinese nationals.
And even as it gears up for the Chinese market - DBS is already thinking of an eventual listing in China.
With a registered capital of over 4 billion yuan or US$523 million, DBS China is now among the first few foreign banks to incorporate in China.
This will give it access to a huge pool of savings - with the total sum of renminbi deposits in China estimated at some US$2 trillion.
Local incorporation will allow DBS China to offer yuan-denominated banking services, wealth management products and even its own brand of credit cards in the country.
Completing the local incorporation process is a key step for overseas bank to provide the same comprehensive retail services as their domestic competitors.
DBS now joins six other overseas bank including Citigroup, Standard Chartered and HSBC, to become China registered subsidiaries, but all of them are still waiting approval for specific yuan services.
While foreign banks have an advantage in terms of service quality and credibility, the sheer size and wide network of domestic banks make the latter a formidable force to be reckoned with.
China's five largest banks have over 80,000 branches nationwide.
"Size does matter and therefore in the next five years, we'll continue to build our infrastructure which we already have done. We're not aiming to compete in terms of number of branches, but more like a total solution. We're going to expand investments into China in terms of systems and in terms of human resources," says Teresa S.Y. Lin, Chief Executive Officer, DBS Bank (China).
So besides making its presence felt by opening up to 40 branches in China, DBS China is set to expand its virtual presence with online banking as well.
The Bank is also planning a five-fold increase in staff strength to 2000 over the next five years.
And its long term aim - an eventual listing on the Chinese stock market.
"DBS is also very interested (in public listing). China has a huge pool of funds; we very much welcome the opportunity to tap into these funds via entering the stock market. These plans are still under discussion, when the regulatory framework is in order, we'll act accordingly," says Jethro Lau, Deputy Chief Executive Officer, DBS Bank (China).
Having gotten a nationwide license to grow organically did not distract DBS from its ambitions to grow in China via acquisitions or strategic alliances.
"We also want to grow inorganically and that's through taking a stake in a bank. The other channel we're looking at…is the securities license, because to do origination, distribution and underwriting, we need a securities license, and this is an area DBS is very strong in. We're actively talking to a few people," says Frank Wong, Vice Chairman, DBS Bank.
DBS expects China to be its most important overseas market eventually, contributing some nine per cent of the Group's profit in five years time.
"We've been profitable even after investing so much money in China, more so in the last one and a half years. So we look to be profitable, very profitable, a few years down the road," says Mr Wong. - CNA/yy
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