Long-Term Commitment

An Interview with Dr. the Honorable David K.P. Li, Chairman and Chief Executive, The , Limited

EDITORS’ NOTE David Li is also a puts china on track to become the foreign bank, as far as the regulations are con- member of the Legislative Council world’s second-largest economy – sur- cerned, and a chinese bank, due to our roots in of Hong Kong and the Banking passing Japan – by the end of 2010. hong Kong. this is our home, and this speaks Advisory Committee and repre- china’s sizeable domestic market volumes for our commitment to serving our cli- sents The Bank of East Asia on the has replaced some of the lost export ents in hong Kong and the mainland. Executive Committee of the Hong demand. Further, as consumers in the long-term commitment is extremely im- Kong Association of Banks. He is u.s. and europe become more cost- portant in china, and we have had a continuous Chairman of the Chinese Banks sensitive, china’s effi cient producers presence in china since 1920. Association, and has served as a are still best positioned to supply the while local chinese banks do have a larger member of the preparatory com- products that overseas markets want. branch network than we do – magnitudes larger, mittee for the Hong Kong Special that said, i don’t see china re- in fact – we have a very strong international reach, Administrative Region, as a Hong turning to 20 percent-plus annual ex- covering north america, europe, and east asia. Kong Affairs Adviser to the People’s Dr. the Hon. David K.P. Li port growth any time soon. that is a key advantage as china becomes more Republic of China, and as Vice How has BEA been affected by closely integrated with the world economy. Chairman of the Basic Law Drafting Committee. the economic crisis? What are your plans for international The Basic Law underpins One Country Two hong Kong has experienced a severe growth for BEA, and what are the key mar- Systems, which provides the framework for Hong economic blow. in the fi rst three quarters of kets where you see opportunities? Kong’s current status within China. Li is the re- 2009, our economy contracted by 4.7 percent. the bank defi nitely sees china as the market cipient of an M.A. as well as an honorary doc- nevertheless, we have weathered this crisis in with the most growth potential. with the quicken- torate in Laws from the , far better shape than the asian fi nancial crisis ing pace of fi nancial liberalization, more opportu- and serves on the boards of numerous corpora- just over a decade ago. the relief measures in- nities are becoming available every year. tions and institutions. troduced by the hong Kong government – in For example, in october 2009, the main- particular the $15 billion in loan guarantees for land banking regulations were eased to per- COMPANY BRIEF As the largest independent local small and medium enterprises – prevented un- mit hong Kong-domiciled banks to establish bank in Hong Kong, The Bank of East Asia, Limited employment from rising too sharply. branches throughout the neighboring province (BEA, www hkbea.com) was incorporated in 1918, add to this the spill-over impact of the china of . in the past, we had to gain ap- and provides corporate and personal banking ser- stimulus measures, and business sentiment in proval on a city-by-city basis. now, we are free vices to customers in China and overseas. The bank hong Kong has held up very well. as a con- to expand throughout the entire province. is listed on the and sequence, asset markets have also rebounded. also starting in July 2009, the central gov- is one of the constituent stocks of the Hang Seng this, in turn, has kept bad loan exposure under ernment relaxed the regulations governing trade Index. The Bank of East Asia employs more than control. in fact, mortgage delinquencies have settlement in renminbi for designated fi rms in 10,000 people worldwide and maintains some 200 actually fallen this year compared to last year. fi ve approved cities – shanghai, guangzhou, branches including a New York- and California- the improved market sentiment has led to shenzhen, dongguan, and zhuhai. this is an based subsidiary in the United States, The Bank of a notable increase in fundraising and other fi nan- important step on the road to eventual liberal- East Asia (U.S.A.) N.A.; a Canadian subsidiary, cial market activities. From January to october ization of china’s currency regime. the Bank of East Asia (Canada); and branches 2009, fi rms raised some $14 billion through ipos since the launch of the pilot scheme, there in Great Britain, the British Virgin Islands, and in the hong Kong market, by far the best-per- have been 173 cases of cross-border renminbi trans- throughout Southeast Asia. forming ipo market in the world this year. this actions, amounting to rmb230 million. the pilot has helped to boost our bank’s fee income from scheme has enabled bea to make use of renminbi How much of an impact has the global eco- investment advisory and brokering activity. deposits for trade fi nance and other lending pur- nomic crisis had on the China market, and has moreover, the rally in the asset markets poses, generating higher yields for the bank. the market stabilized in recent months? has, in turn, boosted consumption. private con- What are your key priorities for BEA the biggest challenge ahead is weak con- sumption, having fallen for four consecutive for 2010 in order to retain your leadership sumer demand in the united states and europe. quarters, turned positive in the third quarter on position in the market? consumers are under pressure to save, now that as- a year-on-year basis. our top priority is the chinese market, as set prices have fallen. the bleak employment out- as our bank is also very strong in china – the strength of the economy speaks for itself. our look does not provide much hope that consumer we are the second largest foreign bank oper- past investments in this market – in personnel, in spending will rebound quickly. export producers ating in that market – we are very confi dent branch locations, in brand-building – are bearing in china have been, and continue to be, affected. regarding future growth opportunities as the fruit at the right time in the market cycle. nevertheless, thanks to quick action by the mainland market continues to expand. we are also very concerned about market chinese government to provide stimulus, eco- In China’s competitive market, how do volatility. we have always taken a conservative nomic activity in china has held up relatively you differentiate BEA from its competitors approach to credit control, and we have seen well. our bank is forecasting that the chinese and defi ne what makes the brand unique? the wisdom of our approach confi rmed in the economy will grow by 8.5 percent this year. this bea has the unique status of being both a aftermath of the fi nancial crisis.• 44 Leaders posted with permission. copyright © 2010 leaders magazine, inc. volume 33, number 1