Financial services provider has seen significant rise in Chinese investment in the US over past five to 10 years
Wells Fargo & Co, the United States-based banking and financial service provider, is banking on the growing number of Chinese companies and financial institutions investing abroad for growing its business in China.
Timothy Sloan, senior executive vice-president and group head of wholesale banking at Wells Fargo, said in an interview with China Daily that "international business accounts for about 5 percent of the assets as well as the revenue of Wells Fargo. We expect this (international business) to double in the next five years ... the majority of that growth is going to come from our business in Asia and in particular China".
Ever since the Chinese government started encouraging domestic companies to expand abroad, China has shown an increased interest for investment across a wide range of areas, including commercial real estate, industrial and food companies.
A recent report by Rhodium Group, a New York-based research consultancy and advisory company, found that Chinese firms spent $6.4 billion on 88 foreign direct investment transactions in the US during the first six months of the year, the highest on record.
Real estate and hospitality were by far the biggest sectors for Chinese investment in the first six months, followed by financial services and insurance. "Commercial real estate and hotels accounted for 40 percent of the total Chinese investment in the past year, rising from just 11 percent two years ago," said Thilo Hanemann, research director at Rhodium Group, in the report.
Sloan said: "Over the last five to 10 years, we've seen a real increase in Chinese investment in the US, particularly in commercial real estate properties including office buildings and hotels. A number of large acquisitions have been made in just a few years ... and the pace of acquisitions of US companies has clearly increased during that same period."
Wells Fargo has a dedicated "China Desk" in the US, which is staffed by native Mandarin speakers, to provide seamless and easy services for Chinese companies.
The bank is looking to continuously develop relationships with customers going from China to the US, said Richard Yorke, the bank's executive vice-president and head of international group.
"It's really around investment grade multinational names - be they State-owned enterprises or large private enterprises. We do a lot of due diligence around those names as we do in any country," he said.
Chinese companies are increasingly looking for medium-sized acquisitions rather than big acquisitions because those are easier to make. This trend happens to fall right into one of the bank's key competitive advantages, he said.
Wells Fargo is the largest middle market lender in the US and caters to nearly one in three medium-sized companies in the country. Its investment bank is very focused on this particular market segment.
With a branch in Shanghai, the bank is upgrading its representative office in Beijing into a branch. The old office was located in the Beijing Central Business District on the east side of the city. It has moved to the Financial Street where head offices of many global financial institutions are located.
"Having a branch here will allow us to be closer to our customers and to provide a wide range of services more efficiently," Yorke said.
As the size of international operations of Chinese financial institutions has grown in recent years, the bank's relationship with Chinese banks has expanded geographically.
"When Chinese banks open offices in the US, they normally have a branch in New York, but their customers are spread across the whole country. So we often work together to cooperate with the branches of Chinese banks to help support their customers," he said.
The bank also shares a lot of knowledge with Chinese banks in terms of retail banking, technologies, compliance and operational risks in the US.
It helped Bank of China Ltd to complete the issuance of $3 billion Tier-2 capital notes at a coupon rate of 5 percent per annum in offshore markets.
The notes have been listed on the Hong Kong Stock Exchange since Nov 14.
