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Nanyang Technological University, Singapore Corporate Day, 19 th September 2003: Arati Varma

Business Study Mission Shanghai / Suzhou, December 2002 Foreign Banks in China: Critical Success Factors and Lessons Learnt. Nanyang Technological University, Singapore Corporate Day, 19 th September 2003: Arati Varma Susann Naomi Bhatti Masayoshi Odaka Gabriel Rüeck. 100%.

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Nanyang Technological University, Singapore Corporate Day, 19 th September 2003: Arati Varma

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  1. Business Study Mission Shanghai / Suzhou, December 2002 Foreign Banks in China: Critical Success Factors and Lessons Learnt Nanyang Technological University, Singapore Corporate Day, 19th September 2003: Arati Varma Susann Naomi Bhatti Masayoshi Odaka Gabriel Rüeck

  2. 100% Setting the Stage Market share of the 200+ foreign banks in total current assets:only 2% What is your estimation of the market share of foreign banks in China?

  3. Agenda • Project Overview • Our Mission in Shanghai • Current Situation in China • Deutsche Bank AG • Banking in China • Conclusions • Q&A

  4. Project Overview 2% Market Share Research on Financial Sector in China BSM Comparison with the Environment in Singapore Verification and Discussion of Findings with Experts Summarise Findings and draw Conclusions

  5. Project Overview – Mission in Shanghai Verify: • Economic parameters • Competitive environment • Regulatory framework Discuss: • Deutsche Bank AG • Bank of America • DBS Bank • Dresdner Bank • Bank of Communications • gic AHK DIHK • Managers of MNCs • Government Officials • Academics

  6. Today Geographical and product related restrictions on foreign banks’ business 2001 China signed the accord for admittance to the WTO 2002 Market for all foreigners (enterprises & individuals) open to RMB business, subject to grant of license 2007 Unrestricted RMB business with all Chinese (enterprises & individuals) Current Situation in China Gradual Opening of the Financial Markets:

  7. Deutsche Bank AG • Among the top 20 FIs worldwide • Market Capitalization: € 48.8 billion • Total Assets: € 918 billion • 95,000 staff in 2,300 offices worldwide • 3 Divisions: CIB, PCAM and CI • APAC is an integral part of the bank’s strategy • Regional HO in Singapore • operates under a wholesale banking license

  8. Deutsche Bank AG - China • 3 Offices: Shanghai, Beijing and Guangzhou • 100 employees in China • Business primarily with foreign corporate clients 1995: Representative Office in Shanghai 1999: Branch status granted 2002: RMB License granted

  9. Foreign Banks in China - threats: • Limited scope of business • “Immature” legal framework • Frequent change in PBOC regulations • Insufficient risk management tools • Telecommunications and infrastructure • Human resources • Importance of “Guanxi”

  10. Foreign banks - opportunities: • No obligation to lend to SOE • Leverage on expertise: • Consumer credits • Credit cards • Asset management and pension funds • E-banking • Investment funds • International transactions

  11. Foreign banks - challenges: • High cost for business operations • Small customer base – foreign companies • Lack of licenses limits business opportunities • No access to local currency deposits • Scantiness of company audits • Missing network of relationships

  12. Foreign banks - leverage on strengths: • Attractiveness to local staff • Large product range • Access to foreign currency market • Higher quality of products and services • Efficient operations • International Experience • Transparency

  13. Conclusions • Long-term strategy necessary (10 years) • No short-term profits possible • Start small (foreign enterprises) • Focus on niche markets • Organize information flow from PBOC • Do not underestimate the government • Diligent selection of banking partners

  14. Q&A 谢谢! Thank you! “Know the other side, know yourself, and your victory will not be threatened. Know the terrain, know the weather, and your victory will be complete.” Sun Zi

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