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Chinese government controlled Bank of China Ltd injects capital into NZ subsidiary, boosting its ability to grow lending

Business
Chinese government controlled Bank of China Ltd injects capital into NZ subsidiary, boosting its ability to grow lending
12th Apr 17, 10:04am by Gareth Vaughan

Bank of China New Zealand Ltd has received a $160 million capital injection from its Chinese government controlled parent, boosting its ability to grow lending in NZ.

Companies Office records show 160 million shares were issued this month to the Beijing-based Bank of China Ltd by its New Zealand subsidiary for $160 million.

One of four of China's big, majority government owned banks, Bank of China received banking registration for its NZ offshoot from the Reserve Bank in November 2014. It was the third of  the big four Chinese banks to launch operations in NZ after ICBC and China Construction Bank.

As of December 31, Bank of China NZ had gross loans of $345.919 million including residential mortgages of $33.759 million, and corporate loans of $309.387 million. Total deposits stood at $214.180 million, and total assets at $514.534 million.

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8 Comments

by  Andrewj  |  12th Apr 17, 11:19am 1491952765

A Bank of China (NZ) facility has been put in place to fund growth. Fonterra has already grown from having its food service business in seven cities to 76 cities, for example, and there's more to come.

"We have rapid expansion here. The Anchor retail business we're still investing in, so we're still on cash negative basis," says Spierings. "Of course we have the Beingmate deal in there, we have farms. So there's a lot of things we need the facility for.
http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=118…

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by  Davo36  |  12th Apr 17, 12:38pm 1491957516

"I'm an optimist for what we can control," says Spierings.

How is this guy still in this job?

Haven't they been saying for 10 years that China is where all the growth is?

And yet, they don't seem to have made any money over there at all?

And now he comes out and says "Oh man, the growth in China will be phenomenal". Why would anyone believe that.

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by  positivelywallstreet  |  12th Apr 17, 12:54pm 1491958442

Chinas population replacement may be as low as 1.6 and baby formula growth predicted at only 5% approx.
We compete with the europeans and north america, i would have viewed the situation as static and throwing money at china distorts the picture
But optimists only read the good news.

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by  Casual Observer  |  12th Apr 17, 1:46pm 1491961580

According to the article his comment on growth is It is of course less growth than what it was, but that double-digit growth will never come back," says Spierings. "But I think if we can keep it in the bracket of, say 3, 4 to 6 per cent, that's beautiful growth still. And if we can have it on a consistent basis, that's fine."

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by  positivelywallstreet  |  12th Apr 17, 2:12pm 1491963140

That is interesting because I took the figure from the Baby formula article.
Ill have a dig around and see if Fonterra losses in the China market are identifiable
As a benchmark 5% growth seems to be on par with Kiwifruit, lets not talk about honey.
Dairy infrastructure looks expensive to me and I would have thought to expect a higher return
Also China is seen a being a get rich quick market, the land of milk and honey,5% growth sounds like a superannuation scheme.

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by  spinach1  |  12th Apr 17, 12:59pm 1491958767

So, in my imagination I see chinese depositing funds into an account in china which then allow them access to a mortgage from the banks branch in NZ. Is this flurry of bank setup just a way for the chinese government to satisfy and encourage individuals to buy up assets outside china without suffering capital flight? The fractional reserve thing will mean that most of the amount lent out at this end is just so much vapour and not so much of a risk from speculation. Maybe we (the rest of the world) should get ahead of this, even at this late stage?

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by  SmoKey  |  12th Apr 17, 4:12pm 1491970330

We also need a Sharia compliant NZ bank to please the ABs and that Bank can lend money with no interest charge for solving the FHB house buying problems ? Will any Middle Eastern Country oblige ?

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by  Davo36  |  12th Apr 17, 4:42pm 1491972147

So China prints a bunch of money, sticks it in their bank over here and lends it to kiwis to buy houses?

Or lends it to Chinese domiciled here? So they can buy our houses?

Great.

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