Cleveland-based Keycorp has opened a Hong Kong-based financial subsidiary, becoming the latest regional bank to expand its global trade finance operations.
The new unit, Key Trade Services Ltd., will issue documentary letters of credit for Hong Kong-based suppliers of the bank's customers.
Keycorp, a $67.5 billion-asset bank company, last year handled about $75 billion in letters of credit, which are guarantees from a bank for payment to a supplier once goods have been delivered. The bank said it was prompted by "burgeoning trade opportunities" to set up the Hong Kong unit.
Leon Wahba, senior vice president-international at Society National Bank, a unit of Keycorp, said issuing letters of credit directly to Hong Kong suppliers would avert duplicate banking charges and help the bank increase business in Asia.
As a means of reducing costs, all offshore processing operations will be handled by CoreStates Bank.
Society will run the new Hong Kong operation. The bank, which merged with Keycorp last year, has long been active in trade finance on behalf of corporations in the Midwest.
Asia has become increasingly attractive to smaller-scale U.S. banks as the region's economy continues to expand.
Within the last several months, Chicago-based Northern Trust Co. has obtained a license from Hong Kong regulators to set up a local unit for securities lending. NBD Bancorp, Detroit, has also obtained a branch license to handle trade finance, commercial lending, and deposit-taking there.
Other banks are also expanding their Asian networks. For example, First Union Corp., Charlotte, N.C., has set up a joint venture with Hongkong Chinese Bank Ltd., and Minneapolis-based First Bank System Inc. has opened a Hong Kong trade service company.
Bigger players, like Wells Fargo & Co., San Francisco, and First Interstate Bancorp, Los Angeles, are also expanding in Asia.
Wells Fargo has a joint venture with HSBC Holdings PLC, the London-based international banking group. And First Interstate has an alliance with Standard Chartered PLC, another British bank with an extensive network of offices in Asia.
