The International
Heads of Transactional Financial Services Dialogue, Beijing
Held in Beijing, China, November 12th 2010
Proceedings Report
Competition and Cooperation in China’s
Transaction Banking Industry
 Bank clients are pushing Chinese lenders to internationalise rapidly
 The partnership model is important for Chinese banks to strengthen networks
 IT challenges are a concern, especially in the face of RMB internationalisation
Supported by:
Copyright The Asian Banker
December 8th 2010
Held on November 12th 2010 at the Westin Financial Street, Beijing, China
The following are the proceedings of the “International Heads of Transactional
Financial Services Dialogue, Beijing”, which was held to determine issues
specific to competition in China’s transaction banking industry in 2010/2011.
I. Introduction
The Asian Banker’s “International Heads of Transactional Financial Services Dialogue”
series is designed to bring together key participants in the transaction banking industry in
order to find common challenges in the evolution of the industry, and to strengthen crossindustry cooperation. The discussion is meant to be open and confidential.
The working session discussed the driving forces, key concerns and challenges that are
instrumental in gaining operational efficiencies in a rapidly expanding banking sector in
China and overseas. This proceedings report captures the essence of the conversation and
the key issues that were discussed in a substantive manner.
II. In attendance
The session was attended by these senior executives:
1. Chaired by: Mr Emmanuel Daniel, President and CEO, The Asian Banker
2. Co-chair: Ms Lisa Robins, MD, Treasury & Securities Svcs, China, J.P.Morgan
3. Co-chair: Mr Christian Edelman, Partner, Financial Services, Oliver Wyman
4. Mr Wang Zhihui, GM, Settlements and Cash Management, ABC
5. Mr Lin Qingsheng, Assistant GM, International Dept., ICBC
6. Mr Pang Jingping, Deputy Head, Payments & Cash Management, ICBC
7. Mr Tan Chee Yong, GM of Structured and Trade Finance, China Bohai Bank
8. Liu Zeyun, Assistant GM, International Banking Department, China CITIC Bank
9. Mr Zhao Xin, GM, Beijing Important Customer Department, SPDB
10. Mr Michael Cheung, Head of North Asia, SWIFT
11. Mr Percy Batliwalla, Head, Global Treasury Sales, FIs & Public Sec, AP, BAML
12. Mr Peter Hoflich, Managing Editor, The Asian Banker
III. Key Discussion Points
The following were the issues identified by the attendees of the session:
1. Chinese banks are making a major impact in the international arena through
increased attendance at global fora, such as Sibos
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2. International business is growing for Chinese tier 1 and tier 2 banks, led by
corporates and large SME clients going overseas
3. The partnership model is important for Chinese banks, who are having trouble
building the distribution networks fast-moving clients demand
4. IT challenges are still a major concern, because of both internal resource
challenges and limitations placed on banks by regulators
5. Creating standards in the industry is seen as the key to smoother growth for the
transaction banking industry in China
6. Catering to the needs of overlooked SMEs is a new focus for banks looking for
the next wave of growth
7. Global banks are catering more to rising local needs by creating specific Chinafocussed initiatives
1. Chinese banks are making a major impact in the international arena
through increased attendance at global fora, such as Sibos
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Asian participation at Sibos in Amsterdam in 2010 was 50% higher than that of
the last one held in Europe, which was in Vienna in 2008; Asian participation in
Europe in 2010 was equal to that of the last Sibos in Asia, which was in Hong
Kong in 2009.
 The Chinese and Japanese delegations were the largest; the Japanese delegation
was large because Sibos will be held in Japan in 2012.
 The Chinese language is becoming less of a barrier, as SWIFT is preparing to
create capabilities for the use of Chinese characters in its messages.
2. International business is growing for Chinese tier 1 and tier 2 banks, led
by corporates and large SME clients going overseas
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Chinese banks are becoming bigger adopters of SWIFT as they develop more
international business, and some are satisfied that SWIFT is addressing Chinese
banks’ needs and clearing demand; but they are still looking for more answers
from SWIFT as they internationalise.
Organisational structures are challenging the needs of Chinese banks, as
international business is now coming from domestic divisions as well as
international divisions.
Clients that are investing overseas are pushing the banks to step up overseas
branches quickly.
The tier 1 Chinese banks have already developed overseas business, now tier 2
banks following them; among their clients, the large corporates have gone
overseas and now large SMES are going too.
Chinese banks have severe challenges obtaining the banking licenses that they
need to go forward, especially in the US.
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
The largest banks are focusing on the impact of an internationalized renminbi and
are pacing themselves with the step-by-step reform of the renminbi and gearing
up for increased renminbi settlement against other currencies.
3. The partnership model is important for Chinese banks, who are having
trouble building the distribution networks fast-moving clients demand
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Chinese banks are keen to work with foreign banks more for transaction banking
as they want real-time clearing and settlement and need more capabilities in
gathering information from overseas clients.
Chinese banks are engaging in detailed product talks with both SWIFT as well as
the foreign banks to find out how to internationalise.
Some banks have complained about a favoritism shown to large Chinese banks,
and small and medium-sized banks see that they are being hindered by low credit
limits and unsympathetic partners.
A major challenge in dealing with large foreign banks is that there is no single
point of contact and banks need to talk to many people to get anything done.
Chinese banks are keen to build a bank-to-bank settlement system, but they are
not allowed to so as the People’s Bank of China requires that it’s own domestic
clearing house be used.
For smaller Chinese banks, it may be difficult to profit from clients’ globalization
as credit limits are skewed to larger banks; this, in turn, is prompting them to
cooperate more with each other.
4. IT challenges are still a major concern, because of both internal
resource challenges and limitations placed on banks by regulators
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One bank has upgraded its IT system in clearing and settlements to handle 5,100
transactions per second, but others are lagging.
Chinese banks, required to use the People’s Bank of China clearing infrastructure,
but, prefer to establish cross-banking links between themselves.
More network and IT tools are needed to improve the use of SWIFT.
Gearing up for the internationalisation of the renminbi will place new demands on
settlement technologies, Chinese banks will need to invest in their capacities if
they wish to become players in this business.
5. Creating standards in the industry is seen as the key to smoother
growth for the transaction banking industry in China
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Banks are frustrated that they deal with different platforms in different markets
and are looking for consolidated infrastructures and common platforms.
Chinese banks have high hopes that SWIFT will develop global standards that can
also be adopted by the financial services industry in China.
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Banks are having a hard time organising their structures, which included
distinguishing domestic and international divisions, renminbi and FX transactions.
With the internationalization of the renmnbi, there is a focus of the currency
flowing through Hong Kong and into the region, but specifically towards
Singapore and Taiwan.
6. Catering to the needs of overlooked SMEs is a new focus for banks
looking for the next wave of growth
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Mid-tier banks that mainly have SME clients struggle to scale up to meet clients’
needs in international trade and cash management, and will need to seek more
partnerships with large global banks or other Chinese banks of their peer group.
SMEs are growing larger and larger and have sophisticated needs.
7. Global banks are catering more to rising local bank needs by creating
specific China-focussed initiatives
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International banks are setting up “desks” and business units specifically for
banks taking client business abroad.
As the largest Chinese banks internationalise and stand on their own feet, more
attention will be paid to smaller banks and providing greater value to them.
For this report, and to see our other research, please visit www.theasianbanker.com.
The Asian Banker’s “International Heads of Transactional Financial Services Dialogue,
Beijing” was supported by J.P.Morgan, Oliver Wyman and Bank of America
Merrill Lynch.
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For more information, please contact:
Peter Hoflich
Managing Editor
The Asian Banker
[email protected]