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As more challenges the foreign banks faces, more opportunities for us - AFP/CFP certificate holders.
Foreign banks expect China bonanza
By Sundeep Tucker |
| Tuesday, June 24, 2008 |
A significant number of foreign banks with operations in China expect revenues to double this year in spite of regulatory challenges and staff retention problems that are sending wages soaring, according to a report.
Nine of 42 foreign banks surveyed by PwC, the professional services firm, expect a 100 per cent rise in revenues this year, while a further 10 predict revenues from their mainland operations will grow by between 40 per cent and 50 per cent.
The bullish growth predictions by overseas banks are based on confidence that clients will be attracted to their deeper and more sophisticated product offerings, compared with domestic banks, and their global client relationships.
Foreign banks have flocked to China in recent years, amid rising consumer and corporate demand for retail and wholesale banking products.
The PwC report cites that 76 foreign banks are now operating in China, with 20 having locally incorporated their operations to enable them to offer a wider range of local currency products.
Foreign banks' presence in China is rising fast, albeit from a low base. At the end of last year overseas banks accounted for 2.4 per cent of China's total banking assets, according to official figures.
Among the challenges facing the expansion plans of foreign banks are the recent regulatory changes restricting the amount that locally incorporated banks can lend, and acute talent shortages.
As foreign banks expand their branch networks and product offerings, the threat of movement from one to another has risen amid a severely limited talent pool. Most banks anticipate staff turnover rates of 20 per cent in 2008, the survey found.
Salaries for senior executives, compliance officers and wealth management officers are expected to climb 30 per cent this year, more than twice the rate of other functions.
Mervyn Jacob, PwC financial services leader for China and Hong Kong, said that the quality of candidates for senior positions was becoming weaker, creating concerns among some foreign banks about their ability to maintain service quality.
Mr Jacob added: “Although the foreign banks in China face a number of challenges, the prospects and opportunities are positive.”
