Tianjin is not only the largest port in northern China and the main maritime gateway to Beijing, it is also one of the top five fastest-growing banking regions in China.
Also, with the Binhai New Area district of Tianjin Municipality, the main special economic zone of northern China, Tianjin has become a massive growth hub for foreign investment, manufacturing and industrial development.
Booming economic area
Established in 2009, the Tianjin Binhai New Area (TBNA) incorporates the port of Tianjin as well as nine functional zones dedicated to advanced manufacturing and high-tech industry. The port, which is at the core of the ambitious TBNA project, handled 413 million tonnes of cargo and 10.1 million 20-foot equivalent units of containers in 2010, making it the fourth largest port in the world on throughput tonnage and the third largest port in China after Ningbo and Shanghai.
Binhai has attracted huge foreign interest and at the end of 2010 the number of Fortune Global 500 companies investing and setting up branches there had reached a reported 285, all eager to take advantage of the lowest tax rates in China. For example, in 2009 EADS Airbus opened an assembly plant for its A320 series airliners.
For Bank of Tianjin chairman Wang Jinlong, Binhai represents the fastest growth area of the country and the third pillar of China’s economy. Mr Wang believes that TBNA’s strong growth represents a key advantage for his bank and is a prime contributor to the bank’s 20% annual growth rate in recent years.
Bank of Tianjin
Bank of Tianjin, which is ranked the 31st largest bank in China and 401st in the world in The Banker’s 2011 Top 1000 World Banks listing, was established in 1996 as Tianjin City Commercial Bank, but in 2007 it was renamed and approved by the China Banking Regulatory Commission (CBRC) to operate regionally. With strong growth it has become one of the largest of China’s more than 110 city commercial banks.
As part of its expansion, Bank of Tianjin was encouraged to bring in foreign strategic investors and in 2006 Australia’s ANZ Group paid $111.5m for a 20% stake in the bank (the maximum shareholding allowed for a foreign bank investor). In November 2010, the ANZ spent another A$126m ($135m) to maintain its 20% stake in a A$629m capital raising for the bank valuing Bank of Tianjin at A$2.3bn.
With ANZ as a strategic partner, Bank of Tianjin has gained considerable help in regards to corporate governance, technology and international business and Mr Wang says there are 20 projects in collaboration with the ANZ at present. Bank of Tianjin is determined to expand regionally and now has branches in Beijing, Shanghai, Changsha and Chengdu. It also has plans to establish in Guangzhou and Shenzhen and in the long term to move outside China, but much depends on CBRC approval.
In the meantime, the bank’s focus is its domestic market (39.5% of bank lending is to small and medium-sized enterprises) while it is looking to raise further capital for expansion and is currently preparing an initial public offering. But, as Mr Wang explains, again much depends on CBRC approvals, as well as the state of the capital markets.
China Bohai Bank
Tianjin’s other major bank is China Bohai Bank, which The Banker’s Top 1000 World Bank listing for 2011 ranks as the 33rd largest bank in China and 438th in the world. Bohai, whose first branch opened in 2006, was the brainchild of the Tianjin mayor, Dai Xianglong, and is the first national banking licence to have been approved by the State Council since Minsheng Bank in 1995.
As one of only 12 joint-stock commercial banks in the country, Bohai is a truly national bank and, unlike Bank of Tianjin or Binhai Rural Commercial Bank, has no problems expanding across China. Bohai has operations in 13 provinces stretching from Shanghai to Chengdu, along with two branches and 18 sub-branches in the Tianjin area, its dominant business centre.
Bohai’s president, Zhao Shigang, believes his young bank needs to grow quickly in the short term, something it has certainly achieved in the past two years, with net profits up 84.35% in 2009 and up 199.45% in 2010. While the bank is well aware of the strict controls imposed by the CBRC, Mr Zhao sees huge growth potential in the Binhai economic zone and has the UK’s Standard Chartered Bank as a long-term strategic partner, holding a 19.99% stake to provide strong operational risk controls and advantages in risk management.
With a non-performing loan ratio of just 0.1%, Mr Zhao sees China Bohai Bank’s strategy as being based on efficient allocation of capital and better profitability. He expects a Rmb5.95bn ($917m) capital injection from major shareholders this year. While credit growth has slowed this year to 20% following tightening measures, he notes that first-quarter profits in 2011 were up 100%, with net profits expected to be up 120% for the year. Retail is targeted to account for 20% of profits in years to come.
