Euromoney Conference
Chongqing: Gateway to Western China
Presented by Derek Wong
Vice Chairman, Dah Sing Banking Group Ltd.
14 June 2011
Agenda
1. Dah Sing Group
2. Why Chongqing
3. Why Bank of Chongqing
4. Business Cooperation
5. Conclusion
Company Information
• Dah Sing Group provides a full range of banking services and
insurance products in Hong Kong, Macau and China.
• Dah Sing Bank was founded in 1947.
• Dah Sing Financial Holdings Limited and Dah Sing Banking
Group Limited are listed on the Hong Kong Stock Exchange.
• In 2005, DSBG acquired Pacific Finance and Banco Comercial
de Macau.
• DSB acquired a 17% interest in Bank of Chongqing in 2007,
and acquired an additional 3% in 2008.
• In 2008, DSB (China), a wholly owned full licensed bank, was
established for the businesses in the PRC.
Company Information (Cont’d)
• Financial Highlights of Dah Sing Banking Group Limited:
For year ended 2010
Total Assets:
Total Deposits:
Advances to Customers:
Shareholders’ Funds:
Profit Attributable to Shareholders:
Core Tier 1 Capital Adequacy Ratio:
Capital Adequacy Ratio:
HKD131,839 million
HKD102,027 million
HKD 72,749 million
HKD 13,528 million
HKD 1,074 million
10.2%
16.3%
Shareholding Structure
The Bank of TokyoMitsubishi UFJ,
Limited
Mr. David Shou-Yeh Wong
(Chairman) and his
General Public
associates
15%
40%
Dah Sing Financial Holdings
(Stock Code: 0440)
74%
Dah Sing Banking Group
(Stock Code: 2356)
45%
26%
Group Structure
Dah Sing Financial Holdings
(Stock Code: 0440)
100%
74%
Life assurance and general
insurance business
in Hong Kong and Macau
Dah Sing Banking Group
(Stock Code: 2356)
100%
100%
12%
Dah Sing Bank
(48 branches in HK)
Great Wall Life
PRC
20%
Bank of Chongqing
PRC
(87 branches / subbranches)
100%
MEVAS Bank
100%
Banco Comercial Dah Sing Bank (China)
de Macau, S.A.
(4 branches + 1 sub(15 branches)
branch in China)
Agenda
1. Dah Sing Group
2. Why Chongqing
3. Why Bank of Chongqing
4. Business Cooperation
5. Conclusion
Chongqing
• Chongqing is one of the 4 direct
municipalities reporting directly
to State Council.
• Unlike Beijing, Shanghai and
Tianjin, Chongqing is the only
direct municipality in western
China.
• Chongqing is a traditional
manufacturing base with strong
R&D capabilities.
• Population is over 32 million in
Chongqing. Over 300 million in
neighbour provinces.
Strong Support from the Central Government
• 2000: Western Development (西部大开发)
• More policy supports after DSB’s investment in 2007:
•
•
•
•
2007: 314 Overall Strategy (314总体部署) by General Secretary Hu Jintao
(胡锦涛总书记): Accelerate the development of Chongqing to be the important
growth pole (西部地区的重要增长极), the economic centre in upper Yangtze
river region (长江上游地区的经济中心) and the municipality of coordinated
urban and rural reform and development (城乡统筹发展的直辖市)
2009: State Council No.3 Document – “Several Opinions on Accelerating the
Urban and Rural Reform and Development of Chongqing”
2010: Liangjiang New Area (两江新区) - After Shanghai Pudong New Area
and Tianjin Binhai New Area, China’s only inland and third municipal-level
new area
2011: Chengyu Economic Zone (成渝经济区)
Economy
“Chongqing is the model city for China’s future.”
The New York Times
• A business friendly and efficient local government
• Rapid economic growth:
GDP
Growth
2008
2009
2010
Chongqing
14.3%
14.9%
17.1%
China
9.6%
9.2%
10.3%
• More than 154 Fortune 500 companies are in
Chongqing now, e.g. GE, BP, HP, IBM, Microsoft,
,
NTT, Oracle, Honeywell, Ford, Cannon, etc.
Agenda
1. Dah Sing Group
2. Why Chongqing
3. Why Bank of Chongqing
4. Business Cooperation
5. Conclusion
Bank of Chongqing
• Bank of Chongqing (BOCQ) was
founded by consolidating 37 city
credit unions in 1996.
• Non-Performing Loans Ratio
reached 22.6% in 2003.
• With the support of the local
government to implement the
restructure program (龙虾三吃),
the bank issued new shares and
sold non-performing loans. NPL%
dropped to 5.0% as of the end of
2005.
• Over 20 foreign banks were
interested in acquiring BOCQ
shares as strategic investor in
2006.
The Deal
• BOCQ and DSB found common in
areas such as business culture,
management philosophy, retail
banking, etc.
• No language barrier. Strong affinity
(缘份) does matter.
• Both banks signed “Strategic
Cooperation Agreement” and
“Business Cooperation Agreement”
on 4 April 2007.
• DSB acquired a 17% interest in
BOCQ in April 2007 and additional
3% in Oct 2008.
Agenda
1. Dah Sing Group
2. Why Chongqing
3. Why Bank of Chongqing
4. Business Cooperation
5. Conclusion
Business Cooperation
• Board Level
• DSB nominated 2 representatives as BOCQ directors (one
as Vice Chairman and the other as Executive Director) and
1 independent individual as Independent Non-Executive
Director.
• In addition to the board meetings, DSB representatives
have actively participated in different board committees,
including Strategy Development Committee, IT Guidance
Committee (as committee chairman) and Risk Management
Committee.
• Staff Secondment
• DSB has seconded 3 executives (one is BOCQ’s Executive
Director) to BOCQ to strengthen the management
capabilities in risk management, retail banking and financial
management.
Corporate Governance Development in Recent Years
A. Corporate Governance (Board Level Committees)
• Strategy Development Committee (战略发展委员会)
• Risk Management Committee (风险管理委员会)
• Audit Committee(审计委员会)
• Related Party Transactions Committee (关联交易控制委员会)
• Remuneration and Nomination Committee (薪酬及提名委员会)
• IT Guidance Committee (信息科技指导委员会)
B. Internal Audit
• Independency of IA functions
• Made recommendations on the reporting line of IA
• Proposed a new IA organization structure
C. Risk Management
• Established Risk Management Department
• Developed Strategic Risk Management Plan
• Submitted Risk Appetite and Risk Policy to the Board for approval
Corporate Governance Development in Recent Years
D. IT Governance
• Recommended IT Advisor and Chief Information Officer to
BOCQ.
• Conducted IT Gap Analysis, IT Vision and IT Policies and
Procedures
• Kicked off 12th Five-Year IT Development Plan
Business Support and Cooperation
1. Credit Card
• BOCQ is the first city commercial
bank in western China issuing credit
card
2. Financial Planner Training
• Worked with Hong Kong Institute of
Bankers to train 100 BOCQ front
line staff to be qualified Certified
Financial Management Planner
3. Overseas Training
• Supported overseas training for
BOCQ directors, supervisors,
senior/middle management
Financial Figures
BOCQ Business Growth in Recent Years:
Before DSB Investment
After DSB Investment
RMB in
million
2005
2006
2007
2008
2009
2010
Assets
30,157
32,548
44,631
56,441
80,866 108,239
Deposits
22,700
28,815
35,331
42,243
59,248
73,856
Loans
14,905
18,861
23,720
28,792
42,255
52,967
Net
Profit
153
274
556
655
875
1,083
Key Indicators
BOCQ Key Indicators in Recent Years:
Before DSB Investment
After DSB Investment
2005
2006
2007
2008
2009
2010
NPL%
5.02%
1.66%
1.06%
0.77%
0.47%
0.36%
Cost /
Income%
45.5%
40.7%
32.3%
35.8%
36.3%
33.9%
CAR%
9.49% 12.41% 10.66% 10.77% 13.75% 12.41%
ROE%
14.1%
14.6%
22.7%
22.1%
23.9%
24.0%
Agenda
1. Dah Sing Group
2. Why Chongqing
3. Why Bank of Chongqing
4. Business Cooperation
5. Conclusion
Conclusion
• Given the financial performance, BOCQ is now
among The Banker Top 1000 World Banks.
(2010 Overall Ranking: 690)
• To DSB, the BOCQ investment is a very positive
and good experience.
• While participating in the board of BOCQ, DSB
can learn how to compete and operate a retail
and commercial banking business in China,
which will benefit the development of DSB
(China).
• Through BOCQ investment, DSB can contribute
to the development of city commercial banks in
China.
Thank You