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Bank Of East Asia Ltd. Business Information, Profile, and History

10 Des Voeux Road Central
Hong Kong

Company Perspectives:

Mission Statement: We at BEA strive to provide best in class financial services, always demanding the highest standard of professionalism and integrity of ourselves. With a commitment to quality of service, we focus on satisfying customer needs. We aim to grow, together with our customers, our shareholders and our colleagues.

History of Bank Of East Asia Ltd.

One of Hong Kong's oldest Chinese-owned banks, Bank of East Asia Ltd. (BEA) is also one of its largest, ranking in the top five among the city's banks in terms of deposits, and among the top ten in terms of its loan portfolio. BEA offers a full range of commercial banking services to the corporate and personal banking markets, as well as investment banking and a range of services geared specifically for the mainland China banking sector. BEA offers a variety of services, including foreign currency savings, mortgage and consumer lending, credit cards, online banking, syndication loans, as well as insurance products through subsidiary Blue Cross (Asia-Pacific) Insurance Ltd. The company also provides business, corporate, and investor services through another subsidiary, Tricor Group. Hong Kong remains BEA's center of operations, with more than 130 branches. Nonetheless, BEA has built up a strong international component, with operations in the United States and Canada and branch offices in much of southeast Asia. BEA is also highly active in China--the bank has maintained a presence on the mainland for some 75 years--with plans to play a primary role in the offshore renminbi market. Publicly listed BEA remains controlled by the founding Li family, represented by David Li as chairman and CEO.

Founding a Hong Kong Banking Institution in the 1920s

British banking institutions dominated colonial Hong Kong's banking sector into the 20th century. In the years following World War I, however, the colony saw the rise of a growing number of local, Chinese-owned banks founded specifically to provide banking services to the island's Chinese population. The Chinese banks were typically small, family-owned businesses. Yet they also provided the start for many of the city's wealthiest business empires.

One of the earliest and longest-lasting of the local banks was The Bank of East Asia (BEA). Four families, the Lis, Wongs, Kans, and Fungs, joined together to found their own bank in 1918 and began providing financial services to the local Chinese community. By 1919, the group's operation had grown enough to open its first headquarters, on 2 Queen's Road. While the other families retained their shares in the bank, the Li family proved the most active in its direction, and ultimately became BEA's chief shareholders--and one of the island's wealthiest families.

From the start, BEA had international ambitions and by 1920 had already established two branches outside of Hong Kong, opening offices in Shanghai, and another in the former Saigon, in Vietnam. That country remained a key foreign market for BEA, which opened a second Vietnamese branch in 1930 in Haiphong. By then, BEA had already grown into one of Hong Kong's most prominent locally owned banks, underscored by the construction of its distinctive new headquarters building in 1935.

The years of World War II, and China's communist-led Cultural Revolution, transformed Hong Kong's banking community. The Mao-led government now forced foreign banks to exit the mainland market. Only BEA was allowed to remain on the mainland, where its Shanghai branch maintained its operations, albeit on a limited scale. Nonetheless, BEA's presence enabled the bank, and the Li family, to establish strong ties with many of China's leaders. Ties with China's large expatriate community also led BEA to develop its international network, and particularly in the Southeast Asian region, where the Chinese community quickly established itself as a driving commercial and industrial force. In 1952, BEA opened a new foreign branch, this time in Singapore.

In the late 1960s and through the 1970s, BEA played the role of an innovator among Hong Kong's Chinese banks. In 1969, the bank became the first Chinese-owned bank on the island to computerize its operations. The bank was also the first Chinese bank on the island to list its stock on the Hong Kong Stock Exchange, becoming one of the mainstays of the exchange's Hang Seng index. In another innovation, BEA joined with Bank of America to launch the first credit card based on the Hong Kong dollar in 1975.

By then, however, the bank was forced to withdraw from the Vietnamese market, as that country came under control of the communist government. Instead, BEA turned its attention to mainland China, where the first signs of a thaw had begun to show. The company's continuous presence in the mainland made it an important foreign partner for the Chinese government as it prepared to institute the economic reforms that were to transform China into the world's most vibrant market in the next century.

BEA became the first foreign bank to form a joint venture in China, joining in the creation of China-Beijing Air Catering Ltd. in 1979. In a move more closely related to its banking operations, BEA's credit card became the first foreign card to be accepted for use on the Chinese mainland.

International Bank in the 1980s

BEA continued to seek opportunities to expand its mainland presence, particularly with the creation of the Shenzen and Guangzhou free trade zones, across the channel from Hong Kong. BEA also partnered in the founding of Joint Electronic Teller Services Ltd., or Jetco, which became the first company to launch automated teller machines in Hong Kong, as well as in Shenzen and Zhuhai, and also on Macau.

David Li joined the bank in the early 1980s and became chairman at the middle of the century. The new generation of the Li family now stepped up the bank's expansion efforts, in preparation for the handover of Hong Kong to China slated for the middle of the 1990s.

BEA's growth followed two primary paths over the next two decades. The bank began a diversification effort, such as the launch of a life insurance joint venture with the United States' Aetna in 1983. The bank expanded its insurance operation again in 1991 when it acquired Blue Cross (Asia-Pacific) Insurance Ltd. In 1984, the bank joined with Bank of China (Hong Kong) Ltd. to form the leasing joint venture Trilease International. The following year, BEA established a securities trading arm, originally called Tung Shing Securities Company, but which later changed its name to East Asia Securities Company in 1998. The company also became the cofounder of the first foreign financing company launched by a Chinese company, China International Finance Company Ltd., in 1986.

The second part of BEA's development came through a more aggressive international expansion. The bank especially began targeting markets with large Chinese populations, such as the United States, where it opened its first branch in New York in 1984. In 1986, the bank opened a new subsidiary on Grand Cayman Island. The following year, the bank established a branch in Guangzhou, then upgraded its office in Shenzhen to a full branch.

Further abroad, BEA opened a second office in the United States, in New York's Chinatown, in 1989, then opened its first office in Europe, in London, the following year. The company's Western development continued into the 1990s, with the opening of a new office in Los Angeles in 1991, and the formation of a subsidiary in Canada, as well as an office in Toronto, in 1992.

Mainland Ambitions in the New Century

Yet the Chinese mainland remained the company's primary expansion market. Through the 1990s, the company began opening new offices in most of the mainland's major urban markets, such as Xiamen in 1991, Dalian in 1992, Fuzhou, Taipei, and Beijing in 1993, Qingdao in 1994, Wuhan in 1995, and Tianjin in 1996. Although the company was restricted to opening representative offices in most of its new markets, during the 1990s it began receiving permission from the Chinese government-run Bank of China to upgrade its offices to full branch status. Such was the case in Dalian, in 1993, and Taipei in 1997.

While it continued to build up its international network in the late 1990s and early 2000s, BEA launched a still more aggressive expansion campaign in the late 1990s, now targeting growth through acquisition. In 1995, the bank reached an agreement to acquire United Chinese Bank Ltd., boosting its Hong Kong banking network by 19 branches. That bank was fully merged into BEA in 2001. BEA added another prominent Hong Kong bank, First Pacific, in December 2000, helping to boost the group into the top five among Chinese banks on the island. At the same time, the company considerably boosted its presence in the United States with the acquisition of California's Grand National Bank. That purchase enabled BEA to introduce its corporate banking services to the U.S. West Coast market.

In the new century, BEA once again acted as an innovator, becoming one of the first Chinese banks in Hong Kong to launch Corporate Cyberbanking services in 2000. In 2002, the company also became the first foreign bank to win approval to launch online banking services on the Chinese mainland as well.

The dawn of the 21st century represented new growth prospects for BEA. On the one hand, the bank continued to build up its mainland China business, becoming the first foreign bank to enter the northwestern province of Xian in 2001. In 2003, the bank upgraded its Beijing office to full branch status. The bank also began a new expansion drive into the southeast Asian region, entering Malaysia, Vietnam, the Philippines, Indonesia, and Taiwan. From a small family-owned concern, BEA had grown into a regional financial institution. The company's strong position in booming mainland China made it likely that BEA would remain a banking powerhouse into the new century.

Principal Subsidiaries: The Bank of East Asia (BVI) Limited; The Bank of East Asia (Canada); The Bank of East Asia (Nominees) Limited; The Bank of East Asia (Nominees) Private Limited; The Bank of East Asia (U.S.A.) N.A.; Abacus Share Registrars Limited; Bank of East Asia (Trustees) Limited; Blue Cross (Asia-Pacific) Insurance Limited; East Asia Asset Management Company Limited; East Asia Corporate Services (BVI) Limited; East Asia Facility Management Limited; East Asia Futures Limited; East Asia Property Agency (China) Company Limited; East Asia Property Agency Company Limited; East Asia Property Management (China) Limited; East Asia Secretaries Limited; East Asia Securities Company Limited; Friendly Registrars Limited; Progressive Registration Limited; Secretaries Limited; Standard Registrars Limited; Strath Corporate Services Limited; Tengis Limited; Tricor Investor Services Limited; Tricor Services Limited.

Principal Competitors: Westpac Banking Corporation; Sumitomo Mitsui Financial Group Inc.; HSBC Holdings PLC; Bank of Tokyo-Mitsubishi Ltd.; Bank of China Beijing; China Construction Bank; Agricultural Bank of China.

Related information about Bank

An organization which offers a wide range of services to do with the handling of money. Most banks are commercial banks, which keep money on behalf of their customers, lend it to them, and offer them such facilities as currency exchange, money transfer, credit facilities, mortgages, and investment advice. A central bank in a country (such as the Bank of England or the Banque de France) is the banker for the government, issuing money on its behalf and setting the chief interest rate for loans; it is much involved in the country's monetary policy. Merchant banks offer specialized services to businesses, such as managing shares, dealing in gold or foreign currencies, and providing funds to finance a new business. Savings banks were founded in the 19th-c to encourage people to save, small deposits being placed in interest-bearing accounts. There are also several international banks, which regulate currency matters between countries and handle international loans, notably the World Bank.

see :wiktionary:banker for more meanings.

A bank is a business that provides banking services for profit. Some banks (called Banks of Issue) issue banknotes as legal tender.

Currently in most jurisdictions the business of banking is regulated and banks require permission to trade. Authorisation to trade is granted by bank regulatory authorities and provide rights to conduct the most fundamental banking services such as accepting deposits and making loans. There are also financial institutions that provide banking services without meeting the legal definition of a bank (see banking institutions).

Banks have a long history, and have influenced economies and politics for centuries.

The word bank is derived from the Italian banca, which is derived from a Germanic language and means bench. In recent history, with historically low interest rates limiting banks' ability to earn money by lending deposited funds, much of a bank's income is provided by overdraft fees and riskier investments.

Services typically offered by banks

Although the type of services offered by a bank depends upon the type of bank and the country, services provided usually include:

Taking deposits from their customers and issuing checking and savings accounts to individuals and businesses
Extending loans to individuals and businesses
Cashing cheques
Facilitating money transactions such as wire transfers and cashiers checks
Issuing credit cards, ATM cards, and debit cards
Storing valuables, particularly in a safe deposit box

Financial transactions can be performed through several different channels:

Branch
ATM
Mail
Telephone
Internet

Types of banks

Banks' activities can be characterised as retail banking, dealing directly with individuals and small businesses, and investment banking, relating to activities on the financial markets. However, some are owned by government, or are non-profit making.

In some jurisdictions retail and investment activities are, or have been, separated by law.

Central banks are non-commercial bodies or government agencies often charged with controlling interest rates and money supply across the whole economy.

Types of retail banks

Commercial bank, is the term used for a normal bank to distinguish it from an investment bank. After the great depression, the U.S. Congress required that banks only engage in banking activities, whereas investment banks were limited to capital markets activities. Since the two no longer have to be under separate ownership, some use the term "commercial bank" to refer to a bank or a division of a bank that mostly deals with deposits and loans from corporations or large businesses.
Community Banks are locally operated financial institutions that empower employees to make local decisions to serve their customers.
Community development bank are regulated banks that provide financial services and credit to underserved markets or populations.
Postal savings banks are savings banks associated with national postal systems.
Private banks manage the assets of high net worth individuals.
Offshore banks are banks located in jurisdictions with low taxation and regulation. Many offshore banks are essentially private banks.
Savings bank In Europe, savings banks take their roots in the 19th or sometimes even 18th century. Nowadays, European savings banks have kept their focus on retail banking: payments, savings products, credits and insurances for individuals or small and medium-sized enterprises.

Building societies and Landesbanks both conduct retail banking.
Ethical banks are banks that prioritize the transparency of all operations and make only social-responsible investments.

Types of investment banks

Investment banks "underwrite" (guarantee the sale of) stock and bond issues, trade for their own accounts, make markets, and advise corporations on capital markets activities such as mergers and acquisitions.
Merchant banks were traditionally banks which engaged in trade financing. For example, First Bank (a very large bank) is involved in commercial and retail lending, and its subsidiaries in tax-havens offer offshore banking services to customers in other countries. In Europe and Asia, big banks are very diversified groups that, among other services, also distribute insurance, hence the term bancassurance.

Other types of banks

Islamic banks adhere to the concepts of Islamic law. Also, deposit makers earn a share of the bank?s profit as opposed to a predetermined interest.

Banks in the economy

Role in the money supply

A bank raises funds by attracting deposits, borrowing money in the inter-bank market, or issuing financial instruments in the money market or a capital market. The bank then lends out most of these funds to borrowers.

However, it would not be prudent for a bank to lend out all of its balance sheet. Some governments (or their central banks) restrict the proportion of a bank's balance sheet that can be lent out, and use this as a tool for controlling the money supply.

Size of global banking industry

Worldwide assets of the largest 1,000 banks grew 15.5% in 2005 to reach a record $60.5 trillion. The large number of banks in the US is an indicator of its geographical dispersity and regulatory structure resulting in a large number of small to medium sized institutions in its banking system. Risks include liquidity risk (the risk that many depositors will request withdrawals beyond available funds), credit risk (the risk that those that owe money to the bank will not repay), and interest rate risk (the risk that the bank will become unprofitable if rising interest rates force it to pay relatively more on its deposits than it receives on its loans), among others.

Banking crises have developed many times throughout history when one or more risks materialize for a banking sector as a whole. Prominent examples include the U.S. Savings and Loan crisis in 1980s and early 1990s, the Japanese banking crisis during the 1990s, the bank run that occurred during the Great Depression, and the recent liquidation by the central Bank of Nigeria, where about 25 banks were liquidated.

Regulation

The combination of the instability of banks as well as their important facilitating role in the economy led to banking being thoroughly regulated. In addition, banks are usually required to purchase deposit insurance to make sure smaller investors are not wiped out in the event of a bank failure.

Another reason banks are thoroughly regulated is that ultimately, no government can allow the banking system to fail.

Public perceptions of banks

In United States history, the National Bank was a major political issue during the presidency of Andrew Jackson. Jackson fought against the bank as a symbol of greed and profit-mongering, antithetical to the democratic ideals of the United States.

Currently, many people consider that various banking policies take advantage of customers. Specific concerns are policies that permit banks to hold deposited funds for several days, to apply withdrawals before deposits or from greatest to least, which is most likely to cause the greatest overdraft, that allow backdating funds transfers and fee assessments, and that authorize electronic funds transfers despite an overdraft.

In response to the perceived greed and socially-irresponsible all-for-the-profit attitude of banks, in the last few decades a new type of banks called ethical banks have emerged, which only make social-responsible investments (for instance, no investment in the arms industry) and are transparent in all its operations.

In the US, Credit unions have also gained popularity as an alternative financial resource for many consumers. Also, in various European countries, Cooperative banks are regularly gaining market share in retail banking.

Profitability

Large banks in the United States are some of the most profitable corporations, especially relative to the small market shares they have. For example, the largest bank, Citigroup, which for the past 3 years has made more profit than any other company in the world, has only a 5% market share. Merging banking, investment, and insurance functions allows traditional banks to respond to increasing consumer demands for "one stop shopping" by enabling cross-selling of products (which, the banks hope, will also increase profitability).

Bank size information

Top ten banking groups in the world ranked by tier 1 capital

Figures in U.S. dollars, and as at end-2005www.economist.com/markets/indicators/displaystory.cfm?story_id=7141354 The Economist, The world's biggest banks, List of the world's ten largest banks by tier 1 capital at the end of 2005

Citigroup — 60 billion
Royal Bank of Scotland — 38 billion

Top ten banking groups in the world ranked by assets

Figures in U.S. dollars, and as at end-2004www.economist.com/surveys/displaystory.cfm?story_id=6908408 The Economist, Thinking big, List of the world's ten largest banks by assets in 2004

UBS — 1,144 billion
Royal Bank of Scotland — 1,110 billion

Top ten bank holding companies in the world ranked by profit

Figures in U.S. dollars, and as 2003

Citigroup — 10 billion
Royal Bank of Scotland — 4 billion

Top ten banks in the world ranked by market capitalisation

Figures in U.S. dollars, and as at 26 July 2006www.economist.com/displayStory.cfm?story_id=7226067 The Economist, On Citi's tail, List of the world's biggest banks, by market capitalisation, as at 26 June 2006

Citigroup — 110 billion
Royal Bank of Scotland — 95 billion

History of banking

Main article: History of banking

Florentine banking — The Medicis and Pittis among others
Banknotes — The evolution of modern central banking policies
Bank of America — The invention of centralized check and payment processing technology
Swiss bank
United States Banking
History of Money and Banking in the United States by Murray N. History of banking in the Middle-East

Chronology

Key Dates:
1918: The Bank of East Asia is founded as a family-owned bank for the Chinese community in Hong Kong.
1920: Offices are opened in Shanghai and in Saigon, Vietnam.
1930: A second office is opened in Vietnam.
1952: A branch office is opened in Singapore.
1969: The bank becomes the first Chinese bank in Hong Kong to introduce computer technology.
1975: The bank becomes the first Chinese bank in Hong Kong to launch a credit card.
1979: The first foreign credit card is accepted in mainland China.
1982: The bank introduces automated teller machines to Hong Kong.
1984: The bank opens its first branch office in the United States.
1985: The bank opens an office in Shenzhen, China.
1990: The bank opens a branch in London.
1991: The bank acquires Blue Cross (Asia Pacific) Insurance Ltd.
1992: A subsidiary is established in Canada.
1995: United Chinese Bank in Hong Kong is acquired.
2000: First Pacific Bank in Hong Kong is acquired.
2001: The Grand National Bank in the United States is acquired, expanding corporate banking services to the West Coast.
2003: The bank upgrades its Beijing office to a full branch.

Additional topics

Company HistoryFinance: Banks & Credit

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