Business World

Tuesday 24 April 2018

Bank of China aiming for €700m annual loans here

Guoli Tian of Bank of China
Guoli Tian of Bank of China

Gretchen Friemann

Bank of China's freshly established Irish arm aims to lend close to €700m annually by 2020 as the state-controlled lender attempts to capitalise on deepening trade relationships between Ireland and the world's second-largest economy.

The new Dublin outpost, a subsidiary of the bank's UK hub, was officially launched last month at a ceremony attended by Leo Varadkar, Tánaiste Frances Fitzgerald and Bank of China chairman Tian Guoli.

Yet the fanfare preceded any substantive operational capacity and served more as a mark of intent than as a trigger for an immediate ramp up in lending.

Bank of China, the world's fourth-largest bank by capital, already manages a finance-leasing division in Ireland, BOC Aviation (Ireland) Ltd, but that will continue as a separate unit.

According to sources close to the bank, a new Irish workforce, charged with carrying out the bank's business strategy, is unlikely to be in place for a further three months.

However, within the first year of operation, the Irish office aims to lend between €200m and €300m, rising to €400m in the second year and then up to €700m by the third.

It is understood that the Dublin branch, run by the general manager, Tian Jun, will be joined by the autumn by a new head of corporate lending, who will be charged with overseeing about half-a-dozen bankers.

Sources said the strategy spans three key areas: lending to big Irish corporates, a push into European markets and a deeper focus on the expanding network of Chinese industries and corporations across Europe. This final target represents the bank's most important strategic objective.

China's rapid economic advance has precipitated a wave of offshore investment over the past decade, with Chinese corporations snapping up enterprises throughout the world.

In Europe, the merger and acquisition activity has largely centred on Germany and the UK as China Inc seeks to acquire the sophisticated technologies and advanced manufacturing sectors needed to drive growth in its domestic market.

According to sources, Bank of China's Irish office will also focus on trade financing. Syndicate loans, where the bank acts as part of a group to fund a single borrower, usually a large corporation, are also viewed as key opportunities. Sources said the Beijing-based bank has set a €25m minimum threshold on its syndicate-loan business

The potential to use Dublin as a beachhead into Europe post-Brexit is on the cards too, with Mr Tian highlighting the lender's recent meetings with the Central Bank of Ireland - raising the possibility that the Irish arm will become a fully-fledged subsidiary rather than an offshoot of the London office.

He said: "Because there are uncertainties, we will have the necessary plans."

Bank of China was unavailable for comment.

Irish Independent

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