What impresses Asiamoney most about China Merchants Bank and its operations in the Greater Bay Area is the focus it has put on innovation – whether that is in the kinds of deals it does, or the digital tweaks it rolls out for clients.
On the deals front, CMB worked on a one-of-a-kind convertible bond for a GBA client last year. This was a HK$4.9 billion ($624 million) employee incentive scheme for China Mengniu Dairy, linked to a convertible bond.
CMB International Securities set up an orphan special purpose vehicle to buy convertible bonds sold by Mengniu, and to then issue repackaged notes backed by the bonds to Mengniu’s onshore employees, using the Qualified Domestic Institutional Investors scheme.
The scheme was structured in a way to benefit mainland China employees, using a remote vehicle that is isolated from the financial risks of the parent.
This was a landmark, given the market had been trying to find a viable structure to allow both onshore and offshore employees of Hong Kong-listed Chinese firms to benefit from the growth of the business.
This deal was the first in Hong Kong to use bankruptcy remote SPVs, CBs and QDII structures. CMBI was the arranger and BOC International Asia was the placing agent of the convertible bonds.
To get this deal past the finish, eight entities within the CMB group had to work together, including the head office, CMB International and the wealth division – highlighting the collaborative mindset at the bank when it comes to delivering solutions for clients.
This was just one example of CMB’s focus on innovation.
Its affiliate CMB Wing Lung Bank worked on the first two dollar yulan bonds from China: Bank of China Hong Kong’s debut $500 million deal in January 2021 and Guotai Junan Holdings’ $300 million trade in November.
Named after the magnolia flower native to central and eastern China, yulan bonds were launched in December 2020. The notes are issued through Shanghai and settled on Euroclear as a way to bridge the gap between Chinese issuers and global investors.
On the digital front, CMB prides itself on its position as a fintech bank. The bank allocates 1.5% of its operating revenue every year to a fintech investment fund to transform the firm’s systems and operations, and unleash innovation among its staff.
CMB’s notable products include a cloud platform, a data centre, an open sharing technology platform and an artificial intelligence system that accurately describes and understands user behaviour to provide them with the right tools at the right time.
The number of users of CMB’s mobile app has grown steadily, with downloads rising 17.5%, year on year, in 2021 to 170 million. Monthly active users reached 65.4 million, a 6.8% annual jump, propelled by the bank’s wealthy client base.
In Wealth Management Connect, CMB had provided close to 4,460 clients with cross-border wealth management services by the end of March this year, and helped many clients to open northbound and southbound accounts on the WMC.
Here, too, innovation and the use of technology have been key. CMB and CMB Wing Lung Bank have ways to automate business data processing, cross-border remittance and product purchase – all in a bid to simplify banking for clients, making it Asiamoney’s most innovative bank for the GBA.