BMO 1st Canadian bank to incorporate in China
The Bank of Montreal took a major step forward in its international operations Thursday by becoming the first Canadian bank to incorporate in China.
CEO Bill Downe was on hand to officially open the first branch of Bank of Montreal (China) Co. Ltd. in Beijing.
"The opening of BMO ChinaCo gives us the flexibility we want to expand our product and service offerings for Canadian and Chinese clients — including the possibility of new initiatives in wealth management and retail banking," Downe said.
The new operations in China will provide a base to expand BMO's presence in the area, even though it will initially mainly work in partnership with some local banks.
The new status will allow BMO to cut through a lot of Chinese red tape and, eventually, allow the bank to offer services to Chinese citizens in their own currency.
It also makes it easier for Chinese and Canadian firms wishing to do business in the country.
"Principally, we serve the commercial marketplace and that's because of the growing demand of Canadian companies to do business in China, and Chinese businesses to do business in North America, so it's a bridge on the commercial side," Downe said.
The designation also allows BMO to start underwriting Chinese bonds, as Beijing hand selects what financial firms have access its bond market, worth in the hundreds of billions of dollars.
Downe also mused about opening a wealth management business and selling mutual funds in China, which has a rapidly expanding middle class.
Foreign banks are rushing to establish a beachhead in the world's second-largest — and one of the fastest-growing — economies.
Canadian banks have been making inroads into China over the past few years, although none have outright incorporated as independent entities there.
Bank of Nova Scotia boosted its stake in local bank Xi'an City Commercial Bank to 14.8 per cent last December and CIBC and Royal Bank have similar relationships in China.
Manulife Financial, Canada's largest insurance company, has a joint venture operation in the city of Jinhua and licences for five satellite offices in three provinces. It is also licensed in 39 Chinese cities, and has a 49 per cent interest in China-based ABN AMRO TEDA Fund Management Co.
With files from the CBC's Anthony Germain