Bank of America Corporation (BAC) is looking forward to develop its business in China.
In order to expand its global business, improve the future performance and enhance the competition with the rivals, the US largest financial institution BAC is looking forward to developing more businesses in China.
It was reported that the senior executives of BAC are discussing about the necessity of setting up an exclusively-funded or joint venture company in China. Presently, BAC has not decided how much original capital should be invested into the company. Nevertheless, according to the legal requirements of China, the minimum registered capital should never fall below 1 billion yuan (USD 146.5 million).
BAC was established in China in 2004 and right now has branches in Beijing, Shanghai and Guangzhou. However, BAC is only engaged in the commercial banking service in China since they are missing a license for related businesses. Previously, BAC had built strategic cooperation with China Construction Bank Corporation (CCBC). BAC once held 16.7% shares of CCBC. According to the two banks’ agreement in 2005, BAC received the shares of CCBC and in return, BAC provided consultation and support for CCBC in the business affairs within the agreement, facility lending and credit card joint venture. In addition, BAC could not compete with CCBC in the individual banking business in China.
Last March, BAC reduced the shares of CCBC it held due to its own demand of financing. The outside guessed that BAC was going to quit the cooperation with CCBC. But BAC immediately announced that it would not reduce its holding of CCBC shares before 2011. Anyway, an insider from CCBC said that the agreement between the two banks didn’t limit BAC in opening branches in China nor the other businesses except individual banking service.
Presently, Citibank, HSBC, Standard Chartered and Bank of East Asia have got the license to conduct the business in China. Goldman Sachs, JP Morgan, UBS, Credit Suisse and Deutsche Bank have been authorized to conduct the stock and security sales in China via joint venture. In comparison, BAC obviously fell behind its peers in these fields.
The newly-appointed CEO of BAC Brian Moynihan established the development of overseas business as a major task for BAC after taking his post. China, with its large group of financial consumers, is quite attractive for Brian Moynihan and BAC. It came to our attention that one of BAC’s senior executives Gregory Curl spent most of his time in China in these months and BAC board chairman visited China in the middle of March. The frequent appearances of BAC’s senior executives displayed the company’s interest and determination in entering the Chinese market.