ING to have majority in joint venture bank with Bank of Beijing
March 26, 2019 Category China News Round-up, Weekly
Bank of Beijing (BOB) has received the necessary board approvals for the establishment of a joint venture bank with Netherlands-based ING Bank, in which the latter will be the majority partner. With a total investment of CNY3 billion, the forthcoming joint-venture bank, which is still awaiting regulatory approval, may become China’s first commercial lender in which a foreign shareholder has a controlling interest. ING Bank will hold a 51% stake, and Bank of Beijing 49%. Drawing on the experience of ING Bank in the successful development of direct banking services, the joint venture will build a brand in the area of digital banking with the help of financial technologies and try to become a benchmark to further open up China’s financial sector to foreign investors.
Different from the traditional counter-based model, the direct banking model uses e-channels to provide financial products and therefore has no restriction of time, regions or geographic branches. “The decision to set up a joint-venture bank is a sensible commercial choice for both parties in the context of the further opening up of China’s financial sector,” said Xiong Qiyue, Research Fellow at the Institute of International Finance at the Bank of China (BOC).
ING Bank developed a strategic alliance with BOB in 2005 by acquiring a minority holding. ING Bank held a 13.03% stake in BOB as of September 30. For ING, the aim of establishing a digital banking joint venture with BOB is to gain a share of the online banking market in China, where the combination of technology and financing is creating new business opportunities. “The opportunity we see with Bank of Beijing is to set up a joint venture in the regulatory environment and excel in customer service through mobile phones,” said Ralph Hamers, CEO of ING Group, in an interview with China Daily last year.
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