ICBC (Thai) upbeat over status as yuan clearing bank

ICBC (Thai) was appointed the yuan clearing bank in Thailand by the People’s Bank of China in January this year, a move which the bank believes will provide an opportunity to build up yuan business and promote bilateral and regional economic growth, Ye Hu, chairman of ICBC’s Thai operation, said yesterday.

Trade volumes between China and Thailand expanded significantly over most of the past five years, the exception being last year after China reformed its economic structure.

In 2009, bilateral trade was worth US$331 billion (Bt10.7 trillion), a level which had nearly doubled by the end of 2014, when $636 billion was generated.

Bank of Thailand Governor Prasarn Trairatvorakul delivered a speech yesterday on the inauguration of ICBC (Thai) as the yuan clearing bank in the Kingdom, during which he said that having such a bank in place was the next important step for China in Thailand.

The clearing bank is a mechanism for boosting the financial fundamentals in both Thailand and the region, with Thailand serving as a gateway to Asean and the country adding to its competitive advantage when businesses are considering establishing international headquarters in Southeast Asia, he added.

“China’s prosperity is providing a wide range of untapped opportunities to Thailand, therefore we should work hand in hand to synergise and increase efforts to ensure there is a win-win strategy from this advantage,” he said at the inauguration. 

China has attached importance to research and development in a bid to upgrade its technology to the world-class level, while Thailand can leverage know-how from China to increase its competitiveness, said the governor. 

 

Forex risks 

The clearing bank will help lower the cost for customers of doing business in yuan, said Li Zhigang, chief executive officer of ICBC (Thai).

ICBC (Thai) is now the fifth yuan clearing bank in the ICBC Group, after its operations in Singapore, Luxembourg, Doha and Toronto were granted similar status.

Zhigang said during his introductory remarks on “How will the yuan clearing bank benefit our customers?” at the inauguration, which was also the celebration of ICBC (Thai)’s fifth anniversary, that the clearing bank would not only lower costs for business clients, but could also help them mitigate foreign-exchange risk – and enrich yuan asset-management services, as well.

Moreover, the bank will consider issuing a yuan-denominated debenture and other products such as a yuan mutual fund in the near future, as offering more products and services is part of its vision to be the centre for yuan cross-border transactions in the region, he added.

Being a yuan clearing bank will also help strengthen the market share of ICBC (Thai) in the financial market, through to retail banking, said the CEO.

Following ICBC’s acquisition of ACL Bank in 2010, ICBC (Thai) tripled its assets from Bt65.95 billion to Bt194.88 billion last year.

Net profit increased by 126 per cent over the same period to Bt1.18 billion, while outstanding loans expanded by 206 per cent to Bt146.87 billion.

In the next three years, the bank targets asset growth above the market average, due to its focus on retail business and cross-border trades, said Hu.

The bank is also aiming to achieve a better balance between its transaction fees and interest income, he added.