Feb. 23 (Bloomberg) -- Bank of America Corp., the second-biggest U.S. lender, will accelerate expansion in China after doubling profit and boosting its workforce in the world’s fastest-growing major economy last year.
The company plans to add as many as five branches in China over the next two to three years, from three outlets in Shanghai, Beijing and Guangzhou currently, Huang Xiaoguang, president of Bank of America NA China, said in an interview in Shanghai yesterday. He will raise growth targets in the unit’s three-year strategic plan to be presented to top management next week.
“We want to become a top player among China’s foreign wholesale banks in terms of all metrics,” said Huang, who joined the U.S. bank in October 2010. “We need to grow faster than our competitors to grab market share and stay ahead of them. What we achieved last year was significant, but we want to take it up a notch.”
The expansion in China contrasts with Chief Executive Officer Brian T. Moynihan’s sale of $33 billion in assets and 30,000 announced job cuts elsewhere in the world amid stagnant revenue and rising costs from defective mortgages. China may become Bank of America’s largest revenue and profit contributor in Asia Pacific in two years, according to Huang, who declined to say where the business ranks now.
The Charlotte, North Carolina-based lender, which lured bankers from competitors such as HSBC Holdings Plc and Citigroup Inc. last year to build its China business, will focus on multinational firms, financial institutions and Chinese enterprises seeking overseas expansion, Huang said. It now employs about 500 people in the country, he said.
To make up for slower growth at home, foreign banks including HSBC, Citigroup and JPMorgan Chase & Co. are also boosting investments in China, which is now the world’s third-largest banking market, behind the U.S. and Japan. Their profit growth in China averaged 26 percent over the past decade, according to the China Banking Regulatory Commission.
HSBC, Europe’s biggest bank by market value, said last week it seeks to expand in China by either increasing its branch network almost eightfold to 800 or taking a bigger stake in partner Bank of Communications Co. beyond a 20 percent limit as regulations are eased.
Citigroup said on Feb. 6 it won approval to become the second foreign bank to issue credit cards in the world’s most populous nation.
DBS Group Holdings Ltd., Southeast Asia’s biggest bank, said this month it plans to boost its workforce in China by about 25 percent this year to 2,000 after profit doubled in 2011.
China opened its banking industry to overseas companies in December 2006, sparking competition among foreign lenders for the nation’s corporate and household savings, which reached $12.7 trillion in January. Combined assets at foreign banks exceeded 1 trillion yuan ($159 billion) by the end of October, almost double from five years ago.
Bank of America is looking at all options including a securities venture with a local partner to further tap into the nation’s investment banking market, Huang said.
To bolster capital, the U.S. lender sold 10.4 billion shares of China Construction Bank Corp. in private transactions in November for a profit of about $1.8 billion, leaving it with a 1 percent stake. The divestiture didn’t affect its business relationship with Construction Bank, he said.
Before joining Bank of America, Huang was President of Citibank China. He holds a bachelor’s degree from the Shanghai Institute and an MBA from the Netherlands School of Business.
Bank of America shares have climbed 42 percent this year, the best performance in the 30-company Dow Jones Industrial Average, on optimism that the firm will benefit as the U.S. economy improves.
To contact Bloomberg News staff of this story: Luo Jun in Shanghai at email@example.com
To contact the editor responsible for this story: Chitra Somayaji at firstname.lastname@example.org