ING counts on vast network to fuel its growth in China
ING Bank is pinning its hopes for growth in China on companies looking to go overseas and says operating profits in the region could grow by 10 to 15 per cent a year.
Robert Scholten, country manager at the lender's greater China and Mongolian commercial banking arm, says its operation in the region acts like a platform, connecting outbound and inbound investment activities by leveraging its network in Europe.
The ING group separated its banking and insurance operations as part of a restructuring required by the European Commission in order to be eligible for Dutch state aid during the 2008 global financial crisis.
While many international banks are keen to expand their range of services, the Dutch lender is focusing on running a mainly commercial banking operation in Asia, with investment banking capabilities. By contrast, it is running retail and commercial banking businesses in Central and Eastern Europe.
"Our network is key. There are not that many European banks with an adequate Asian platform and a very deep European network," Scholten said, noting that the commercial banking arm operated in 14 markets in Asia, including the mainland, Hong Kong, Taiwan, Singapore and Mongolia.
ING's growth in operating profit had exceeded targets in the past few years and Scholten said he expected that to remain the case, with Chinese corporate investment in Europe soaring in recent years.
Before 2008, the mainland's annual investment in Europe was less than US$1 billion, but by 2011 it had increased to US$10 billion, according to a report by China International Capital Corporation. It said it expected total investment to reach US$250 billion to US$500 billion in 2020.
State-owned enterprises (SOEs) such as oil, mining and soft commodity companies are looking to gain an international presence. While a transaction such as a merger or acquisition could bring quite a good return in fee income to the bank, Scholten said ING viewed day-to-day business as far more important in tying the bank to SOE clients.
"We do a one-off, all-type financing and then you actually get to know each other," he said. "You can look into their portfolios and expand [the services offered to them]."
Scholten said that in one case ING started a syndication loan with a Chinese company that later became one of its largest clients on the mainland through the maintenance of a major banking relationship.
ING was the first foreign bank to invest in and establish an on-the-ground presence in Mongolia, in 2008.
It is optimistic about business growth in Mongolia despite growing concerns from credit rating agencies about possible overheating of the country's economy and the fragility of its banking system.
Scholten said it was common to see volatility in emerging markets such as Mongolia, which was rich in natural resources.
"[We are] relatively positive the situation for Mongolia will pick up quite quickly at the end of this year and we have already seen some improvement," he said, adding that risk management in its Mongolian operation would be a higher priority than in other parts of the world.
This article appeared in the South China Morning Post print edition as ING banks on vast network to fuel mainland growth
Robert Scholten, country manager at the lender's greater China and Mongolian commercial banking arm, says its operation in the region acts like a platform, connecting outbound and inbound investment activities by leveraging its network in Europe.
The ING group separated its banking and insurance operations as part of a restructuring required by the European Commission in order to be eligible for Dutch state aid during the 2008 global financial crisis.
While many international banks are keen to expand their range of services, the Dutch lender is focusing on running a mainly commercial banking operation in Asia, with investment banking capabilities. By contrast, it is running retail and commercial banking businesses in Central and Eastern Europe.
"Our network is key. There are not that many European banks with an adequate Asian platform and a very deep European network," Scholten said, noting that the commercial banking arm operated in 14 markets in Asia, including the mainland, Hong Kong, Taiwan, Singapore and Mongolia.
ING's growth in operating profit had exceeded targets in the past few years and Scholten said he expected that to remain the case, with Chinese corporate investment in Europe soaring in recent years.
Before 2008, the mainland's annual investment in Europe was less than US$1 billion, but by 2011 it had increased to US$10 billion, according to a report by China International Capital Corporation. It said it expected total investment to reach US$250 billion to US$500 billion in 2020.
State-owned enterprises (SOEs) such as oil, mining and soft commodity companies are looking to gain an international presence. While a transaction such as a merger or acquisition could bring quite a good return in fee income to the bank, Scholten said ING viewed day-to-day business as far more important in tying the bank to SOE clients.
"We do a one-off, all-type financing and then you actually get to know each other," he said. "You can look into their portfolios and expand [the services offered to them]."
Scholten said that in one case ING started a syndication loan with a Chinese company that later became one of its largest clients on the mainland through the maintenance of a major banking relationship.
ING was the first foreign bank to invest in and establish an on-the-ground presence in Mongolia, in 2008.
It is optimistic about business growth in Mongolia despite growing concerns from credit rating agencies about possible overheating of the country's economy and the fragility of its banking system.
Scholten said it was common to see volatility in emerging markets such as Mongolia, which was rich in natural resources.
"[We are] relatively positive the situation for Mongolia will pick up quite quickly at the end of this year and we have already seen some improvement," he said, adding that risk management in its Mongolian operation would be a higher priority than in other parts of the world.
This article appeared in the South China Morning Post print edition as ING banks on vast network to fuel mainland growth
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