Overall: Best Chinese bank for BRI 2019
Bank of China
For Chinese banks, the Belt and Road Initiative has long gone beyond simply providing funding for overseas infrastructure projects. In the process of redefining the project, Bank of China is contributing its own understanding of BRI as a Chinese bank.
In the words of an executive at one of the ‘big four’ Chinese banks: “Bank of China is living up to its name.”
With a presence in 57 countries, including 24 BRI countries, Bank of China has the largest footprint worldwide of the Chinese banks, giving it a natural advantage when it comes to introducing China to the world and bringing foreign institutions to China.
The bank has an unshakable position in renminbi clearing services; it has 12 offshore renminbi clearing bank licences, or nearly half of the total of 25 such licences in the world. In April this year, it opened a clearing centre in Japan through its Tokyo branch. Rival ICBC manages only seven.
Bank of China says it has supported 600 BRI projects and provided more than $130 billion of funding to BRI countries as of the end of May.
As an issuer, the bank also sold two BRI-themed bonds, covering eight tenors and six currencies through branches in 13 locations.
As the BRI enters its second phase of connecting people, trade and culture, Bank of China has evolved from being a mere fundraiser to helping connect institutions and investors. It set up what it calls its ‘Bank of China global medium and small corporations cross-border matching services’ to help smaller companies in the BRI countries raise funds. In 2018 alone, these meetings attracted 721 corporations from 30 BRI countries.
Last but not least, Bank of China’s leading position in the panda bond market is such that other banks, not just Chinese ones, will take years to catch up. The Chinese government is promoting panda bonds as part of its path to renminbi internationalization. For the moment though, the many regulatory hurdles, such as different accounting standards and the difficulty of repatriating proceeds offshore, are keeping foreign issuers away. Instead, so-called ‘red pandas’, Chinese companies incorporated in Hong Kong, are filling the space.
Bank of China, however, has become the go-to bank for foreign issuers. During the awards period, it was involved in 13 of the 19 panda bonds issued by foreign issuers.
By August, the bank had helped issuers from five BRI countries to issue a total of Rmb9.5 billion ($1.3 billion) of panda bonds; of these, three (Portugal, Hungary and Italy) were first-time issuers.