France-based bank Credit Industriel et Commercial (CIC) plans to enter the mainland's banking sector through acquiring local players and targeting the high-end market, according to company executives.

 

Timothy Lo, Managing Director of CIC Investor Services Ltd, the bank's Hong Kong subsidiary, revealed the strategy as the mainland opened the renminbi business to foreign banks in line with its World Trade Organization commitment on December 11.

 

"We prefer acquisitions to incorporation," Lo said. "The former is more cost-effective since the application process (of incorporating locally) is cumbersome and time-consuming."

 

Lo did not give a timeframe for acquisitions.

 

"We are not in a rush to enter the market at the current stage," he said.

 

Lo said he did not find the mainland's restrictions on overseas-incorporated banks over-protective.

 

"It is understandable that the market has to be opened in phases," he said. "Otherwise, reform will be on the skids."

 

The China Banking Regulatory Committee (CBRC) has already accepted eight applications from overseas-funded banks to incorporate their mainland branches.

 

They are HSBC, Citigroup, Standard Chartered Bank, Bank of East Asia, Hang Seng Bank, Mizuho Corporate Bank, DBS Bank and ABN AMRO.

 

Lo, a Hong Kong private banking expert who joined CIC in 2004, said the bank will target high-net-worth customers on the mainland, as in Hong Kong.

 

"We are eyeing the high-end segment," he said. "The strategy is consistent with the high-end orientated market position of our Hong Kong arm."

 

The first mainland office of CIC was set up in Beijing in the early 1990s.

 

CIC now has two representative offices in Beijing and Shanghai respectively.

 

"We will press to expand our market coverage, though the location for the next representative office is yet to be identified," he said.

 

CIC's Hong Kong subsidiary changed its focus from serving French corporates and expatriates in local private banking in 2000, when CIC acquired the Asian private banking business of Bank Austria.

 

Currently, 95 percent of customers of CIC Investor Services are Hong Kong residents and 2 to 3 percent are mainlanders with offshore assets, Lo said.

 

(China Daily December 21, 2006)