Bank of China Plans U.S. Expansion, ABS Products During 2015

Bank of China Ltd., the country’s fourth-biggest lender, plans to set up more U.S. branches and sell asset-backed securities this year as cross-border investment between the two countries increase.

The bank, which has branches in New York, Los Angeles and Chicago, is considering locations in cities including Washington D.C. and San Francisco, Xu Chen, the lender’s U.S. president and chief executive officer, said in an interview at Bloomberg’s headquarters in New York on Tuesday. The expansion plan has to overcome stringent U.S. regulations on foreign banks, he said.

“The expansion of U.S. banks in China is much faster than where we are here,” Xu said. “We’d like to do more business beyond commercial banking, but U.S. regulations have limited our development. Expansion of Chinese banks will help expand investment from Chinese companies.”

The bank will “definitely” sell its first ABS product this year as more Chinese investors seek to hold U.S. assets with the rising dollar, Xu said.

Chinese companies invested $5.95 billion in commercial property in the U.S. in 2014, according to Real Capital Analytics Inc. That was almost double the amount compared with a year earlier, placing China second to Canada in terms of U.S. commercial real estate investments.

Bank of China’s investment unit bought an office building in midtown Manhattan last year for about $600 million. It plans to take up about 40 to 50 percent of the space and rent out the rest after the deal is completed later this month, according to Xu. With more than 400 employees in the U.S., the bank is also looking for acquisition opportunities, Xu said.

Property-related loans account for about 20 percent of outstanding loans at Bank of China’s New York branch, while its non-performing loan ratio is zero, Xu said.

— With assistance by Bonnie Cao, and Ye Xie

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