Bank of East Asia Ltd

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Bank of East Asia Ltd.

10 Des Voeux Road Central
Hong Kong
+852 2842 3200
+852 2845 9333
Web site:

Public Company
Incorporated: 1918
Employees: 5,400
Total Assets: HKD 189 billion ($24.3 billion) (2003)
Stock Exchanges: Hong Kong
Ticker Symbol: BKEAY
NAIC: 522110 Commercial Banking

One of Hong Kong's oldest Chinese-owned banks, Bank of East Asia Ltd. (BEA) is also one of its largest, ranking in the top five among the city's banks in terms of deposits, and among the top ten in terms of its loan portfolio. BEA offers a full range of commercial banking services to the corporate and personal banking markets, as well as investment banking and a range of services geared specifically for the mainland China banking sector. BEA offers a variety of services, including foreign currency savings, mortgage and consumer lending, credit cards, online banking, syndication loans, as well as insurance products through subsidiary Blue Cross (Asia-Pacific) Insurance Ltd. The company also provides business, corporate, and investor services through another subsidiary, Tricor Group. Hong Kong remains BEA's center of operations, with more than 130 branches. Nonetheless, BEA has built up a strong international component, with operations in the United States and Canada and branch offices in much of southeast Asia. BEA is also highly active in Chinathe bank has maintained a presence on the mainland for some 75 yearswith plans to play a primary role in the offshore renminbi market. Publicly listed BEA remains controlled by the founding Li family, represented by David Li as chairman and CEO.

Founding a Hong Kong Banking Institution in the 1920s

British banking institutions dominated colonial Hong Kong's banking sector into the 20th century. In the years following World War I, however, the colony saw the rise of a growing number of local, Chinese-owned banks founded specifically to provide banking services to the island's Chinese population. The Chinese banks were typically small, family-owned businesses. Yet they also provided the start for many of the city's wealthiest business empires.

One of the earliest and longest-lasting of the local banks was The Bank of East Asia (BEA). Four families, the Lis, Wongs, Kans, and Fungs, joined together to found their own bank in 1918 and began providing financial services to the local Chinese community. By 1919, the group's operation had grown enough to open its first headquarters, on 2 Queen's Road. While the other families retained their shares in the bank, the Li family proved the most active in its direction, and ultimately became BEA's chief shareholdersand one of the island's wealthiest families.

From the start, BEA had international ambitions and by 1920 had already established two branches outside of Hong Kong, opening offices in Shanghai, and another in the former Saigon, in Vietnam. That country remained a key foreign market for BEA, which opened a second Vietnamese branch in 1930 in Haiphong. By then, BEA had already grown into one of Hong Kong's most prominent locally owned banks, underscored by the construction of its distinctive new headquarters building in 1935.

The years of World War II, and China's communist-led Cultural Revolution, transformed Hong Kong's banking community. The Mao-led government now forced foreign banks to exit the mainland market. Only BEA was allowed to remain on the mainland, where its Shanghai branch maintained its operations, albeit on a limited scale. Nonetheless, BEA's presence enabled the bank, and the Li family, to establish strong ties with many of China's leaders. Ties with China's large expatriate community also led BEA to develop its international network, and particularly in the Southeast Asian region, where the Chinese community quickly established itself as a driving commercial and industrial force. In 1952, BEA opened a new foreign branch, this time in Singapore.

In the late 1960s and through the 1970s, BEA played the role of an innovator among Hong Kong's Chinese banks. In 1969, the bank became the first Chinese-owned bank on the island to computerize its operations. The bank was also the first Chinese bank on the island to list its stock on the Hong Kong Stock Exchange, becoming one of the mainstays of the exchange's Hang Seng index. In another innovation, BEA joined with Bank of America to launch the first credit card based on the Hong Kong dollar in 1975.

By then, however, the bank was forced to withdraw from the Vietnamese market, as that country came under control of the communist government. Instead, BEA turned its attention to mainland China, where the first signs of a thaw had begun to show. The company's continuous presence in the mainland made it an important foreign partner for the Chinese government as it prepared to institute the economic reforms that were to transform China into the world's most vibrant market in the next century.

BEA became the first foreign bank to form a joint venture in China, joining in the creation of China-Beijing Air Catering Ltd. in 1979. In a move more closely related to its banking operations, BEA's credit card became the first foreign card to be accepted for use on the Chinese mainland.

International Bank in the 1980s

BEA continued to seek opportunities to expand its mainland presence, particularly with the creation of the Shenzen and Guangzhou free trade zones, across the channel from Hong Kong. BEA also partnered in the founding of Joint Electronic Teller Services Ltd., or Jetco, which became the first company to launch automated teller machines in Hong Kong, as well as in Shenzen and Zhuhai, and also on Macau.

David Li joined the bank in the early 1980s and became chairman at the middle of the century. The new generation of the Li family now stepped up the bank's expansion efforts, in preparation for the handover of Hong Kong to China slated for the middle of the 1990s.

BEA's growth followed two primary paths over the next two decades. The bank began a diversification effort, such as the launch of a life insurance joint venture with the United States' Aetna in 1983. The bank expanded its insurance operation again in 1991 when it acquired Blue Cross (Asia-Pacific) Insurance Ltd. In 1984, the bank joined with Bank of China (Hong Kong) Ltd. to form the leasing joint venture Trilease International. The following year, BEA established a securities trading arm, originally called Tung Shing Securities Company, but which later changed its name to East Asia Securities Company in 1998. The company also became the cofounder of the first foreign financing company launched by a Chinese company, China International Finance Company Ltd., in 1986.

The second part of BEA's development came through a more aggressive international expansion. The bank especially began targeting markets with large Chinese populations, such as the United States, where it opened its first branch in New York in 1984. In 1986, the bank opened a new subsidiary on Grand Cayman Island. The following year, the bank established a branch in Guangzhou, then upgraded its office in Shenzhen to a full branch.

Further abroad, BEA opened a second office in the United States, in New York's Chinatown, in 1989, then opened its first office in Europe, in London, the following year. The company's Western development continued into the 1990s, with the opening of a new office in Los Angeles in 1991, and the formation of a subsidiary in Canada, as well as an office in Toronto, in 1992.

Company Perspectives:

Mission Statement: We at BEA strive to provide best in class financial services, always demanding the highest standard of professionalism and integrity of ourselves. With a commitment to quality of service, we focus on satisfying customer needs. We aim to grow, together with our customers, our shareholders and our colleagues.

Key Dates:

The Bank of East Asia is founded as a family-owned bank for the Chinese community in Hong Kong.
Offices are opened in Shanghai and in Saigon, Vietnam.
A second office is opened in Vietnam.
A branch office is opened in Singapore.
The bank becomes the first Chinese bank in Hong Kong to introduce computer technology.
The bank becomes the first Chinese bank in Hong Kong to launch a credit card.
The first foreign credit card is accepted in mainland China.
The bank introduces automated teller machines to Hong Kong.
The bank opens its first branch office in the United States.
The bank opens an office in Shenzhen, China.
The bank opens a branch in London.
The bank acquires Blue Cross (Asia Pacific) Insurance Ltd.
A subsidiary is established in Canada.
United Chinese Bank in Hong Kong is acquired.
First Pacific Bank in Hong Kong is acquired.
The Grand National Bank in the United States is acquired, expanding corporate banking services to the West Coast.
The bank upgrades its Beijing office to a full branch.

Mainland Ambitions in the New Century

Yet the Chinese mainland remained the company's primary expansion market. Through the 1990s, the company began opening new offices in most of the mainland's major urban markets, such as Xiamen in 1991, Dalian in 1992, Fuzhou, Taipei, and Beijing in 1993, Qingdao in 1994, Wuhan in 1995, and Tianjin in 1996. Although the company was restricted to opening representative offices in most of its new markets, during the 1990s it began receiving permission from the Chinese government-run Bank of China to upgrade its offices to full branch status. Such was the case in Dalian, in 1993, and Taipei in 1997.

While it continued to build up its international network in the late 1990s and early 2000s, BEA launched a still more aggressive expansion campaign in the late 1990s, now targeting growth through acquisition. In 1995, the bank reached an agreement to acquire United Chinese Bank Ltd., boosting its Hong Kong banking network by 19 branches. That bank was fully merged into BEA in 2001. BEA added another prominent Hong Kong bank, First Pacific, in December 2000, helping to boost the group into the top five among Chinese banks on the island. At the same time, the company considerably boosted its presence in the United States with the acquisition of California's Grand National Bank. That purchase enabled BEA to introduce its corporate banking services to the U.S. West Coast market.

In the new century, BEA once again acted as an innovator, becoming one of the first Chinese banks in Hong Kong to launch Corporate Cyberbanking services in 2000. In 2002, the company also became the first foreign bank to win approval to launch online banking services on the Chinese mainland as well.

The dawn of the 21st century represented new growth prospects for BEA. On the one hand, the bank continued to build up its mainland China business, becoming the first foreign bank to enter the northwestern province of Xian in 2001. In 2003, the bank upgraded its Beijing office to full branch status. The bank also began a new expansion drive into the southeast Asian region, entering Malaysia, Vietnam, the Philippines, Indonesia, and Taiwan. From a small family-owned concern, BEA had grown into a regional financial institution. The company's strong position in booming mainland China made it likely that BEA would remain a banking powerhouse into the new century.

Principal Subsidiaries

The Bank of East Asia (BVI) Limited; The Bank of East Asia (Canada); The Bank of East Asia (Nominees) Limited; The Bank of East Asia (Nominees) Private Limited; The Bank of East Asia (U.S.A.) N.A.; Abacus Share Registrars Limited; Bank of East Asia (Trustees) Limited; Blue Cross (Asia-Pacific) Insurance Limited; East Asia Asset Management Company Limited; East Asia Corporate Services (BVI) Limited; East Asia Facility Management Limited; East Asia Futures Limited; East Asia Property Agency (China) Company Limited; East Asia Property Agency Company Limited; East Asia Property Management (China) Limited; East Asia Secretaries Limited; East Asia Securities Company Limited; Friendly Registrars Limited; Progressive Registration Limited; Secretaries Limited; Standard Registrars Limited; Strath Corporate Services Limited; Tengis Limited; Tricor Investor Services Limited; Tricor Services Limited.

Principal Competitors

Westpac Banking Corporation; Sumitomo Mitsui Financial Group Inc.; HSBC Holdings PLC; Bank of Tokyo-Mitsubishi Ltd.; Bank of China Beijing; China Construction Bank; Agricultural Bank of China.

Further Reading

Cheung, Clare, and Michele Batchelor, "Bank of East Asia Net Rises As Loan Provisions Shrink," Bloomberg News, February 10, 2004.

Hamlin, Kevin, "Asia's Most Influential Bankers," Institutional Investor International Edition, August 1999, p. 41.

Lau, Justine, "BEA's Jump in Profits Hints at Recovery," Financial Times, February 11, 2004, p. 28.

Loong, Pauline, "The Challenge for David Li," Asiamoney, December 2002, p. 22.

Racine, John, "Bank of East Asia Plays for Position in the High-Stakes Contest for China," American Banker, August 16, 1995, p. 5.

Ridding, Jan, "Bank of East Asia Sees Better Conditions This Year," Financial Times, January 27, 1998, p. 27.

Robinson, Karina, "An Iron Fist in a Velvet Glove," Banker, December 2001, p. 20.

M.L. Cohen