Brexit may be causing jitters, but London appears to be maintaining a reputation as the main financial hub in Europe, and banks from around the world still seem to appreciate the strategic value of having a footprint in the City.
China Construction Bank (CCB) is no exception. The state-owned bank, which credit rating agency Standard & Poor’s ranked as the second largest bank in China and in the world by total assets at the end of 2017, opened its first overseas office in London in 1991. However, it was only in recent years that its local operations took off. Today, the bank is building a niche through a strategic presence in the Square Mile and looks at Brexit as an opportunity, rather than a challenge.
“About 80% of our business originates in the UK or China, and 20% in mainland Europe,” says Aimin Yang, CEO of CCB London. “We will leave that part of the business to our branches across the Channel, and focus on the UK and Ireland. I think there are vast opportunities in the local market.”
CCB London gained a subsidiary licence in 2009. However, it was only in 2014, when Chinese premier Li Keqiang designated it as the UK's official renminbi clearing bank – just a few months before the Bank of England finally granted it a branch subsidiary – that it was in a more solid position to scale up local operations.
Today, CCB London provides a range of corporate and investment banking services – mostly to Chinese companies active in the UK, and British companies interested in China – employs about 130 people, and has assets of about $11bn. That might seem to be a small amount for a group that has total assets of more than $3400bn worldwide, most of which originate in China, but its strategic value goes beyond numbers.
“If we look purely at business opportunities, because of culture and language reasons, obviously doing business in Asia is easier,” says Mr Yang. “However, we want to leverage our external presence to help us broaden our vision [and] upgrade our ability to navigate the global market.
“From that perspective, the relationship with the UK is equally strategically important. The UK is such a fantastic place for innovation in fields such as fintech and the banking business is increasingly a technological business. In that regard, we can certainly leverage our presence in London to broaden our vision.”
CCB London is now working to consolidate its role as an enabler of crossborder business between China and the UK, primarily by focusing on Chinese corporates doing business with, or having a presence in, the country. China emerged as the UK’s third largest foreign investor by capital expenditure in greenfield projects between 2014 and September 2018, according to figures from foreign investment monitor fDi Markets, with a particular interest in real estate, energy and financial services.
At the same time, the UK's national and local authorities have been keen to promote British investment into China, and CCB London has been engaging with companies interested in doing business with China by helping them issue renminbi bonds in the Chinese market.
Overall, the accumulated volume of renminbi trade and investment cleared in London has grown to Rmb30,000bn ($4.3bn) in November 2018, consolidating London’s position as the second most important hub for the clearing of offshore renminbi after Hong Kong.
Regardless of Brexit, CCB London is committed to nurturing the close business relationship between London and Beijing.