Bank of East Asia

The Bank of East Asia Limited
Public
Traded as SEHK: 23
Industry Finance
Founded
  • First incorporated in 14 November 1918 (1918-11-14)
  • Officially opened on 2 January 1919 (1919-01-02)
Headquarters Hong Kong
Key people
 David Li (Chairman and CEO)
Adrian Li (Deputy CEO)
Brian Li (Deputy CEO)
Products Financial Services
Consumer Banking
Corporate Banking
Investment Banking
Private Banking
Revenue HK $ 15.953 billion [1]
HK $ 7.565 billion
Total assets Increase US$ 103.5  billion (2017)[2]
Website hkbea.com
Bank of East Asia Ltd.
Traditional Chinese 東亞銀行有限公司
BEA
Traditional Chinese 東亞銀行
The Bank of East Asia Building, Des Voeux Road Central, in Central, Hong Kong.

The Bank of East Asia Limited (Chinese: 東亞銀行有限公司), often abbreviated to BEA (Chinese: 東亞銀行), is the 6th largest licensed bank in Hong Kong on total assets.[3] Its chairman and chief executive is Sir David Li. Its head office is in Central.[4]

It was co-founded in Hong Kong in 14 November 1918 by nine founders, and the impetus for the bank came from the grandfather Li Koon-chun (李冠春), and the great uncle, Li Tse-fong (李子方) of the present chairman (David Li), and Kan Tong-po, JP (簡東浦).[5] The bank had its official opening on 2 January 1919.[6] Today, the company has a market capitalisation of HK$68.4 billion (US$8.5 billion), as at 27 February 2011, with consolidated assets of US$103.5 billion (as at 31 December 2017). It is listed on the Hong Kong Stock Exchange with a stock code of 23.[7] The Bank of East Asia has 72 branches in Hong Kong, and over 200 outlets on global basis. Worldwide, the bank employs around 10,000 staff.[8]

In 1995, BEA acquired United Chinese Bank, which was fully merged with the bank in 2001. In 2000 it acquired First Pacific Bank. In 2001, the Bank of East Asia, Limited (Merger) Ordinance was passed by the Legislative Council of HK.　Under this Ordinance, the business and undertakings of First Pacific Bank were transferred to BEA. [9]

Business Segmentation

BEA delivers its full range of services to clients through the following segments:[10]

  • Corporate Banking
  • Personal Banking
  • Wealth Management
  • Insurance & Retirement Benefits
  • Treasury Markets
  • China
  • International divisions

Headquarters building

The bank's headquarters are located within the 29-storey Bank of East Asia Building (東亞銀行大廈), at No. 10 Des Voeux Road Central, in Central, Hong Kong. The building stands between New Henry House and The Landmark. Completed in 1982,[11] it is the third generation Bank of East Asia Building at this location. A first generation building was demolished in 1933,[12] while a second generation building stood there from 1935 to 1980.[13]

Mainland operations

Bank of East Asia began its mainland China business in 1992. In 2007, Bank of East Asia was among the 4 foregin banks approved by China Banking Regulatory Commission (CBRC) to establish a locally incorporated bank, the Bank of East Asia (China) Ltd (BEA China).[14] On 20 May 2008, Bank of East Asia became the first foreign bank to issue yuan-denominated debit cards in mainland China, taking advantage of the recent removal of a key restriction on foreign banks' retail business in the country. The bank will issue the debit cards jointly with China UnionPay, the country's only bankcard network operator. The company claimed that the launch of debit cards would help attract retail banking customers by giving them greater convenience in accessing their deposits. In addition, it is the only foreign bank in mainland China to offer direct Alipay payment support and the only foreign bank in mainland China to independently issue credit cards (RMB-denominated UnionPay credit cards in 2008, and more recently Visa-branded US dollar-denominated cards in April 2011).

As of April 2018, BEA China operates branches and sub-branches in 30 cities.[15]

  • Beijing
  • Shanghai
  • Guangzhou
  • Shenzhen
  • Zhuhai
  • Dalian
  • Xiamen
  • Xian
  • Chongqing
  • Qingdao
  • Hangzhou
  • Wuhan
  • Nanjing
  • Chengdu
  • Shenyang
  • Tianjin
  • Urumqi
  • Hefei
  • Shijiazhuang
  • Suzhou
  • Zhengzhou
  • Harbin
  • Changsha
  • Kunming
  • Ningbo
  • Jinan
  • Wuxi
  • Fuzhou
  • Nanning
  • Nanchang

Overseas operations

BEA operates overseas in several locations serving expatriate Hong Kong residents. A 70% stake in Bank of East Asia Canada was sold to Industrial and Commercial Bank of China in early 2010 and all branches were renamed ICBC Canada in July. BEA USA remains the only wholly owned unit of BEA in North America. However, a preliminary agreement has been reached with ICBC to sell a majority stake in this operation as well.

As of April 2018, BEA operates overseas branches in the following countries:[16]

  • Singapore
  • Malaysia
  • United States
  • United Kingdom

Singapore

The Singapore Branch of BEA opened in 1952. The branch provides banking services to corporate and individual clients. The branch building is at 60 Robinson Road of Raffles Place.[17]

Rumours of capital inadequacy

The attempted bank run

On 24 September 2008, Bank of East Asia issued a statement to counter "malicious rumours" about its stability, as queues of customers seeking to withdraw funds formed outside some of its Hong Kong branches. It condemned the rumour mongers, declaring that it had sufficient funds to meet customers' requests, and noting that its capital adequacy ratio was above the industry average, at 14.6 percent.[18] A statement by Joseph Yam, the then chief executive of the Hong Kong Monetary Authority, dismissed the rumour and strongly supported the bank, adding that funds would be made available to the bank if required but that no request had been made. Earlier in the week, the bank had been forced to restate its previous half-year's earnings downwards by nearly 12 percent after it was revealed that one of its staff had conducted unauthorised trades and then buried the losses.[19]

Restructuring

Disposals of BEA Wealth Management and Tung Sing Holdings Company Ltd

In Oct 2015, BEA entered into agreement with Sinopac Securities to sell BEA Wealth Management Services (Taiwan) Limited (“BEA Wealth Management”) and Tung Shing Holdings Company Limited (“Tung Shing”). BEA chairman and CEO Dr David K.P. Li said that the disposals would allow BEA to rationalise its securities business in Greater China region. There was no disclosure of the transaction amount involved in this sales.[20][21]

Cost Savings Target 2016-2018

BEA targeted to save HKD 700 millions between 2016 and 2018 whilst reducing dividend payouts and other measures to trim its assets. The saving target was about 8% of its cost base in 2015. It was expected that 40% of savings coming from business alignment, 25% from restructuring middle to back offices, and remaining via branch automation and streamlining. In June 2016, BEA already slashed 180 jobs[22] and closed down 22 securities brokerages outlets.[23][24]

Sell Tricor

BEA sold its holding of Tricor to private equity investment firm Permira for HKD 6.47 billion in 2016 as parf of BEA portfolio review. Tricor is a professional services firm setup in 2000 and provides professional services to corporates around the world, particularly in the Asia Pacific region. BEA expected to book an extraordinary profit of HKD 3.1 billion from this transaction.[25][26]

Consumer Finance Assets

As part of BEA portfolio and strategy investment review, BEA decided to sell a portfolio of consumer finance assets to China money lender QL Finance for HK$1.08 billion (US$139 million), as part of its drive to cut costs and streamline operations. The portfolio disposed came from BEA’s wholly owned subsidiary Credit Gain in China.[27]

Disputes

Elliott Management

Hedge fund activist investor Elliott Management filed a lawsuit against BEA in July 2016 in Hong Kong court over a share placement transaction.[28] Elliott Management, which held 7% of listed shares of BEA, had included majority of the bank's directors, its CEO and chairman in the lawsuit. The transaction in question was on BEA's issuance of new shares to Japan’s Sumitomo Mitsui Banking Corp (SMBC) in 2015. Elliott cited "allegations of unfairly prejudicial conduct” and “alleged serious corporate governance failings”. Elliott hoped to secure a declaration from the court that these placements were passed by BEA for “an improper purpose” and looked for an order requiring BEA to lift the contractual restrictions that would prevent SMBC and Caixa, another strategic investor on BEA, from reducing their stakes on BEA.[29]

In response, BEA applied to have Elliott’s petition against them “struck out”. This case was heard by Mr Justice Jonathan Harris from July 17–19, 2017.[30]

Indexed Stock

Bank of East Asia has been a long constituent of Hang Seng Index in Hong Kong. In the quarterly review of Hang Seng index composition ended on Jun 29 2018, it was announced by Hang Seng Indexes Company that Bank of East Asia will be removed from constituent stocks from Sep 10 2018 and replaced by another. The index calculation company said that Bank of East Asia did not meet the turnover and market capitalisation minimums. [31]

References

  1. ↑ Announcement of 2017 Final Result 2018-2-22 Retrieved 2018-04-29
  2. ↑ Company profile 2018-04-06 Retrieved 2018-04-29
  3. ↑ KPMG HK Banking Survey 2017, Page 44 Retrieved 2018-04-30
  4. ↑ "Investor Enquiries." Bank of East Asia. Retrieved on 11 September 2011. "Registered Office : 10 Des Voeux Road Central, Central, Hong Kong"
  5. ↑ Sinn, Elizabeth (1994). Growing with Hong Kong, the Bank of East Asia, 1919-1994. Hong Kong: Bank of East Asia / Hong Kong University Press. pp. 1, 7.
  6. ↑ "The Bank of East Asia" (PDF).
  7. ↑ "Investment Service Centre". Hong Kong Stock Exchange. 25 October 2013. Retrieved 26 October 2013.
  8. ↑ BEA Company Profile Feb 17 2018
  9. ↑ The Bank of East Asia, Limited (Merger) Ordinance, No. 34 of 2001 2001-12-27 Retrieved 2018-05-01
  10. ↑ BEA Company Profile Retrieved 2018-05-01
  11. ↑ Bank of East Asia Building, property listing by Landvision Property Agency
  12. ↑ Bank of East Asia Building (1st Generation) at gwulo.com
  13. ↑ Bank of East Asia Building (2nd Generation) at gwulo.com
  14. ↑ China Embassy in UK and North Ireland news 2007-03-21 Retrieved 2018-04-30
  15. ↑ BEA China Networks Retrieved 2018-04-30
  16. ↑ BEA Interneation Network Retrieved 2018-04-30
  17. ↑ Singapore Branch overview, BEA website. Extracted 2018-06-09
  18. ↑ Company press release, 24 Sept 08
  19. ↑ Savers mob Bank of East Asia over stability rumours - Yahoo
  20. ↑ BEA Disposes Brokerage Subsidiaries to SinoPac , BEA Press Release 2015-10-23 Retrieved 2018-04-30
  21. ↑ SinoPac Securities (Cayman) Acquires Tung Shing Holdings, ACN News Wire , Asia Corporate News Network 2015-10-26
  22. ↑ Further gloom: More Hong Kong layoffs forecast in wake of Bank of East Asia sackings, SCMP 2016-06-03 Retrieved 2018-04-30
  23. ↑ Bank of East Asia to shut all 22 brokerage outlets in Hong Kong to cut costs, The Straits Times 2016-06-02 Retrieved 2018-04-30
  24. ↑ Bank of East Asia targets HK$700m cost-savings amid profits slump, Nikken Asian Review 2016-08-19 Retrieved 2018-04-30
  25. ↑ BEA sells Tricor to PE firm Permira for HK$6.47 billion, SCMP 2016-10-05 Retrieved 2018-04-30
  26. ↑ Permira to buy Bank of East Asia's Tricor unit for US$838 million, Reuters 2016-10-05 Retrieved 2018-04-30
  27. ↑ Bank of East Asia sells consumer finance assets to Chinese lender QL Finance for HK$1 billion, SCMP 2017-11-30 Retrieved 2018-05-01
  28. ↑ Elliott sues Bank of East Asia over share sales, escalating dispute, Reuters 2016-07-18 Retrieved 2018-05-01
  29. ↑ Elliott ramps up pressure on Bank of East Asia with lawsuit, China Daily Asia, 2016-07-18 Retrieved 2018-05-01
  30. ↑ What is Bank of East Asia and Elliott’s dispute about?, SCMP 2017-07-18 Retrieved 2018-05-01
  31. ↑ Bank of East Asia and China Merchants Port kicked out of benchmark Hang Seng Index, SCMP 2018-08-10. Retrieved 2018-08-12
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