China Construction Bank has become the first Chinese bank to open its doors as a standalone branch in New Zealand – signalling a significant change in its local investment focus.
Local chief executive Jun Qi said the bank was excited by the potential it created for a greater involvement in funding New Zealand infrastructure.
Previously the China Construction bank (CCB) has operated as a subsidiary company in New Zealand – as the other major Chinese banks do.
That meant it was required to restrict its lending to locally held capital - around NZ$200 million.
But after getting fully accredited by the Reserve Bank late last year, it will now be freed up to operate on a much larger scale, with the ability to leverage the balance sheet of the global bank.
That translated to considerably more investment firepower and opportunity to participate in local infrastructure projects, said Qi.
To put that in perspective, CCB is the second largest bank in the world with assets in excess of NZ$4 trillion.
Qi described the change as the difference between being able to make loans of several million dollars and making loans of hundreds of millions.
"Opening the branch can offer access to the CCB group's funding, so it's easier to execute projects in New Zealand," he said. "We believe it's of strategic importance to New Zealand's economy because we know New Zealand wants to do a lot of infrastructure investment. China Construction Bank would like to support these initiatives."
CCB already has involvement in some significant local infrastructure projects, such as the Puhoi-Warkworth Highway and the Christchurch mountain bike park.
Qi said he saw plenty of opportunity for the bank to help with future transport projects as well as upgrades to ports and airports.
The importance of the formal recognition in New Zealand was highlighted by the attendance of the CCB group chairman Tian Guoli at the opening ceremony.
Finance minister Grant Robertson and housing and transport minister Phil Twyford attended the celebrations, along with the CCB subsidiary company chair Dame Jenny Shipley and ANZ chairman Sir John Key.
NZ Bankers Association chief executive Karen Scott-Howman said she welcomed the arrival of the CCB.
"Basically the branch license allows a lot more wholesale lending to take place," she said.
She said she expected the other Chinese banks operating in New Zealand – ICBC and Bank of China – would likely follow this move opening up a vast pool of capital for major developments.
Getting registered was quite a rigorous process, she said.
"The reason it is so rigorous is that the Reserve Bank wants to make absolutely sure that it understands what the parent bank's regulation looks like and whether they can demonstrate equivalence with the Basel requirements."
That required compiling a huge amount of documentation, she said.
Speaking at an APEC Business Advisory Group event in Auckland on Friday morning, Bank of China NZ chief executive David Wang congratulated CCB.
He said he expected Bank of China would follow with full branch accreditation from the RBNZ.