Westpac is ramping up its wholesale banking presence in Asia – a key growth area for the bank as Australia becomes more integrated with the region.
Australia’s second-largest lender is seeking to hire as many as 100 employees per year in Asia over the next three years, maintaining the region’s revenue growth at 33%, similar to that of 2013.
“We have started building a really solid business across Asia,” David Koh, Westpac's head of corporate and institutional banking in Asia, told FinanceAsia. “If you look at the long-standing trade flows out of Australia into Asia – China in particular – those have been growing at a double-digit pace for quite a while and a pace that outstrips trade flows in and out of China into other parts of the world.”
Over the next two decades, trade between Australia and Asia is forecast to more than double, with Asia ex-Japan expected to account for 73% of total exports by 2030, according to HSBC. China is, and will remain, Australia’s top export market followed by Japan and South Korea.
Australian banks such as ANZ and Westpac have been making a push into Asia in recent years.
ANZ, Australia’s third-largest bank, has been the most aggressive, setting the goal of obtaining 25% to 30% of its profits from overseas, mainly Asia, by 2017. ANZ was the first Australian bank to obtain a renminbi licence and it currently employs 9,100 people in Asia. This compares with Westpac’s regional head count of 350.
However, ANZ’s strategy is different to Westpac’s. Whereas ANZ aims to establish a full banking model in Asia – inclusive of commercial, institutional and retail – the latter is primarily focused on building its wholesale banking business.
“We are very much focused on the Fortune 500 companies around the world, wherever they have touch points with Asia and Australia in particular,” said Koh. “The ones that are not in Australia yet, we will help sell Australia to them.”
Meanwhile, Commonwealth Bank of Australia (CBA) is focused principally on two key markets: Indonesia and China. In both cases, its local franchise is bigger than ANZ's. In China, CBA is driving expansion of its own branded regional Chinese bank – Commonwealth Bank of Australia Country Bank – with 10 branches in Henan and Hebei provinces.
In China, Westpac has branches in Shanghai and Beijing. Only the former has a renminbi licence but Westpac's Beijing branch, which is approaching its third-year anniversary, could be eligible for a licence soon if it can demonstrate its profitability over a three-year period, noted Koh.
Westpac has also made four significant hires since the beginning of the year. These moves follow the recent expansion of Westpac’s Hong Kong office, which includes an enhanced dealing room to support its growing customer activity and renminbi business.
“Out of [the] Hong Kong office, we will be covering South Korea and Japan as well,” said Koh. “If you look at the number of Korean and Japanese companies that are heavily invested in Australia, those are clients that we are looking to do more business with.”
