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This year marks the 10th anniversary of the establishment of ICBC New Zealand, a fully owned subsidiary of the Industrial and Commercial Bank of China, the world’s largest bank by total assets.
It has been the bank’s vision to be a long-term local bank in New Zealand.
The first 10 years of ICBC NZ lays a solid foundation for its sustainable high-quality development. While the bank’s customer base has been steadily growing, as it looks to the future it is exploring opportunities for the New Zealand market based on the trends in banking it is seeing.
Diversification of products and services
The initial phase of establishing a new bank in New Zealand saw ICBC NZ spend its first years integrating itself into New Zealand’s banking systems. During the start-up phase, the investment required in people, systems, profiles and marketing was significant.
Since then, it has rolled out new products and services to its customers in wholesale and retail banking, as well as digital products such as its mobile banking app and online banking platform.
After a decade of development, ICBC NZ has established an asset base of around NZ$3.8 billion and offers a wide range of services, including deposit accounts, corporate loans, home loans, trade finance and global market services, along with dual currency Unionpay debit card in NZD and Renminbi to facilitate New Zealanders’ spending in China. Additionally, the bank has been working with Payments NZ and the industry on SBI365, a significant core payments system project, to extend the processing of domestic electronic payments to seven days a week.
With cross-border transactions becoming more prevalent, ICBC’s diversification is extending into currency options. The bank offers six different currencies — including the New Zealand dollar, Renminbi, US dollar, Australian dollar, Hong Kong dollar and Euro — to cater for diversified demands from its customers in various payment and settlement scenarios as well as foreign exchange trading.
ICBC NZ’s market issuance to support business growth
ICBC NZ has an increasing funding appetite due to high-quality asset growth, necessitating a commitment to developing and diversifying the bank’s local funding sources.
A significant part of this strategy has been market issuance, which has played an essential role in meeting the bank’s funding activities. Since the inception of its operations, ICBC NZ has issued over 1 billion of medium-term notes with the first transaction in 2014. Since then ICBC NZ has adhered to its future intentions as becoming a frequent issuer in the local market with successful transactions.
These transactions are well received by local market reflected in oversubscriptions. Market issuance now accounts for one third of its total funding. The growth in the institutional investor base has also increased ICBC NZ’s proportion of local funding over the years as it continues to improve its self-funding capability.
Not only from a funding perspective but consecutive issuances have also assisted in building a strong and positive brand image which has led to an increase in local market presence.
There is a sense of loyalty and positive perception from NZ investors who have become more familiar and comfortable with ICBC NZ. Investors have a better understanding of its offerings, evident in the growing confidence that investors place on ICBC NZ’s operations.
Excellent customer service and a favourable reputation in the marketplace will be at the forefront of ICBC NZ as it continues its growth.
Deposit channel diversification
The recent failure of Silicon Valley Bank and concerns over the stability of other banks in the global banking system have seen a growing desire among customers to diversify their banking options and seek out safe and reliable alternatives in the face of widespread uncertainty. ICBC NZ serves as such an alternative to customers, evidenced by the steady growth in ICBC NZ’s deposit business in recent years.
ICBC NZ has also become a trusted deposit banking partner for the local Chinese community with strong recognition of the bank’s brand. With unconditional backing from its global parent, ICBC NZ will continue to offer efficient, reliable and competitive deposit products and services to its local customers.
Nov 2013: RBNZ approved bank registration and granted full banking license.
February 2014: First local Chinese bank to operate in NZ. Issued dual currency debit/credit cards.
2014: Joined local High Value Clearing System, being a direct participant bank to settle large payments with other NZ banks and provide NZD clearing services to overseas banks.
2014: USD 50m Debt Issuance launched, raising NZD 50m for 3 years.
2015: Strategic Renmenbi MOU with ANZ, Westpac, BNZ and ASB. USD 50m EMTN Debt Issuance launched.
2016: E-Banking fully operational.
2016: Joined local Bulk Electronic Clearing System for transfers between NZ banks.
2017: Joined local Consumer Electronic Clearing System to enable ICBC NZ customers use ICBC NZ debit card in NZ nationwide.
2017: NZD 268m long term funding raised via domestic issuance.
2018: NZ$100m of 3 year MTN issuance.
2019: Successful 3 and 5 year MTN issuance with 2.5x oversubscription.
2020: RBNZ approved Branch License, enabling dual license operation of the bank.
2021: NZD 200m MTN issued via private placement.
2022: Steadily offset Covid impacts to achieve a sustainable development. Raised NZD 175m via domestic issuance.
2023: Implemented SWIFT ISO 20022 messaging standard.
· Sean Tomlinson is a Senior Trader at ICBC (New Zealand) Limited
· ICBC is an advertising sponsor of the Herald’s Capital Markets report
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