Bank of China (Hong Kong) Limited (BOCHK, 中國銀行(香港)有限公司) is the second-largest commercial banking group in Hong Kong in terms of assets and customer deposits, with more than 300 branches in Hong Kong. It was established on 1 October 2001 from a merger of 12 subsidiaries and associates of the Bank of China in Hong Kong, and listed on the Hong Kong Stock Exchange in October 2002. As of the end of 2003, the bank had HK$763 billion in assets and earned net profit of HK$8 billion in 2003.
BOCHK is one of the three banks which issue banknotes for Hong Kong, the biggest member and a founder of the JETCO ATM and payment system, and the designated clearing bank in Hong Kong for transactions involving the renminbi, Mainland China's currency. It is legally separate from its parent, Bank of China (BOC), although they maintain close relations in management and administration and cooperate in several areas including reselling BOC's insurance and securities services. It also shares its Hong Kong headquarters, the Bank of China Tower, with its parent; completed in 1988, this was the first building outside of North America to exceed 1,000 feet (300 m).
The opening of a branch of the Bank of China in Hong Kong in 1917 marked the entry of state-owned Chinese banks into the then-colony's banking sector. Other banks soon followed suit, starting with Yien Yieh Commercial Bank in 1918. By the time the People's Republic of China was established in 1949, there were 15 branches of state owned Chinese banks in Hong Kong, plus branches of nine Mainland-incorporated banks that were public-private joint ventures. In addition, the Chinese government established Po Sang Bank in 1949 and Nanyang Commercial Bank in 1950. Both of these were incorporated in Hong Kong.
In 1952, the nine public-private banks (namely, Sin Hua Bank Limited, China & South Sea Bank Limited, Kincheng Banking Corporation, China State Bank Limited, The National Commercial Bank Limited, Yien Yieh Commercial Bank, Young Brothers Banking Corporation, Wo Sang Bank and National Industrial Bank of China) were grouped into the Joint Office of Joint Public-Private Banks. The Hong Kong branches of the last three of these nine were closed in 1954 when their parents were shut down by the central government, and management of the remaining six public-private banks were transferred to the Hong Kong and Macau Regional Office of the Bank of China in 1958. The Bank of China later took over management of the Hong Kong branches of Kwangtung Provincial Bank, Hua Chiao Commercial Bank Limited and the Bank of Communications (HKSE: 3328).
In June 1975, the Bank of China moved to increase the capital of the public-private banks. As all of the new capital were from the Chinese government, private ownership in the public-private banks were substantially reduced, in some cases to less than 1%.
The 14 banks were rebranded as part of the Bank of China Group in the 1980s, after a common IT platform was established. Treasury and foreign currency exchange operations were also centralised. However, the individual banks retained their own management.
The restructuring saw all operations of the Mainland-incorporated group members merged into Po Sang Bank, which was then immediately renamed Bank of China (Hong Kong) Limited. Hong Kong incorporated Nanyang Commercial Bank and Chiyu Banking Corporation became subsidiaries of Bank of China (Hong Kong) Limited. Legislation was required for the merger, as Hong Kong does not allow mergers via the pooling of interests, a common procedure in the United States. The Bank of China (Hong Kong) Limited (Merger) Ordinance was approved by the Legislative Council of Hong Kong on 12 July 2001, and the merger was completed on 1 October 2001.
For the 12 months ended 31 December 2003, BOCHK Holdings earned HK$11.6 billion in operating income and HK$8.0 billion in net profit. As of 7 June 2006, 65.805% of BOCHK Holdings is held by Bank of China, in turn 69.265% owned by Central Huijin Investment, an investment holding company 100% owned by the Government of the People's Republic of China.
BOCHK offers a comprehensive range of financial products and services to retail and corporate customers, similar to those offered by most commercial banks. It is primarily known for its interest-income business (taking deposits from retail customers for loans to corporates) although it has been moving into other non-interest-income areas such as personal loans, wealth management and other financial services in recent years. It has Hong Kong's biggest branch network (over 200 branches) and 450 automatic teller machines.
BOCHK is the biggest mortgage lender in Hong Kong in the secondary market; Hang Seng Bank is the biggest in the primary market. BOCHK resells the casualty insurance, life insurance, mandatory provident fund (MPF) and asset management services of various subsidiaries of its parent, Bank of China.
Within Mainland China, BOCHK operates 14 branches (as of January 2005) separately from its parent. BOCHK is treated as a foreign bank, more properly, 境外銀行 (banks outside of the territory), for regulatory purposes as it is incorporated in Hong Kong.
BOCHK has been the designated clearing bank for personal transactions involving the Renminbi (RMB, the currency of Mainland China) in Hong Kong since February 2004. This means that BOCHK acts as a settlement agent for RMB banknotes and funds in Hong Kong and an intermediary between banks in Hong Kong and the People's Bank of China, the central bank of the People's Republic of China. In return, BOCHK takes a 0.125% cut of all RMB deposits in Hong Kong that are repatriated back to Mainland China.
The Chief Executive of Hong Kong announced on 18 November 2003 that the People's Bank of China had agreed to provide clearing arrangements, marking for the first time that the Renminbi, which is fully on the current account but not on the capital account, has been allowed to clear outside of Mainland China. The scope of such RMB business includes deposit-taking, exchange, remittances and RMB cards. Hong Kong banks were invited to apply to become the designated clearing bank for RMB business; the People's Bank of China subsequently chose BOCHK as the clearing bank, for a term of three years.
According to the Hong Kong Monetary Authority, the major responsibilities of the clearing bank are to:
Founded in 1950 in Hong Kong, Nanyang Commercial Bank is a wholly owned subsidiary of BOCHK, with 41 branches. Nanyang primarily focuses on corporate customers, in particular small and medium sized trading and manufacturing companies. It also has a loyal following amongst the overseas Chinese community, especially in South East Asia. It relies on BOCHK for back-end office and IT support.
Chiyu was explicitly created by Chen to create a sustainable business with profits to be devoted to education in Xiamen and the rest of Fujian province in China. Since its founding, it has spent more than HK$1 billion in education in the province, primarily through funding Jimei University and its related schools.
JETCO (traditional Chinese: 銀通) (Joint Electronic Teller Services Limited) is the biggest network of automatic teller machines in Hong Kong and Macau, with nearly 1,700 cash machines. JETCO was founded by BOCHK in 1982 along with the Bank of East Asia, Chekiang First Bank, Shanghai Commercial Bank and Wing Lung Bank, and at present covers all licensed commercial banks in Hong Kong and Macau, except for HSBC and Hang Seng Bank, which has their own system. JETCO connects with the UnionPay network in Mainland China: JETCO cardholders can withdraw RMB cash at UnionPay machines in a number of major cities in Mainland China, while UnionPay cardholders can withdraw cash (up to around HK$4,500 per day) at JETCO machines in Hong Kong.
BOCHK is one of the three banks which issue banknotes for Hong Kong, the other two being HSBC and Standard Chartered Bank. As one of the three note-issuing banks, it is also a rotating chairman of the Hong Kong Association of Banks, the main industry body of commercial banks in Hong Kong.
Bank of China started to issue Hong Kong dollar notes on 1 May 1994, under the name of "Bank of China Hong Kong Branch". Under the Bank of China (Hong Kong) Limited (Merger) Ordinance, After the restructuring, banknotes issued by the Bank of China before its merger remained legal tender after the merger and became the obligations of Bank of China (Hong Kong). A new set of notes bearing the name Bank of China (Hong Kong) went into circulation in 2004.
The Bank of China Tower in Central houses the headquarters of BOCHK. Designed by I. M. Pei, the 70-storey building's height is 315 meters with two masts reaching 369 meters. Construction began in 1985 and the building was completed in 1989, with its official opening on 17 May 1990.
Bank of China Tower was the first building outside North America to break the mark, the first composite space frame high-rise building and was the tallest building in Hong Kong and Asia from 1989 to 1992. A small observation deck on the 43rd floor of the building is open to the public; visits to the main observation deck on the 70th floor is by appointment only.
The structural expressionism adopted in the design of this building resembles growing bamboo shoots, symbolising livelihood and prosperity. While its distinctive look makes it one of Hong Kong's most identifiable landmarks today, it was the source of some controversy at one time, as the bank is the only major building in Hong Kong to have bypassed the convention of consulting with feng shui masters on matters of design prior to construction.