First Chicago NBD Corp. has become the second U.S. bank to open a branch in Beijing, strengthening its presence in the fast-growing Chinese market.
Asia's rapidly growing markets have become a prime target for big U.S. banks, which have been steadily expanding offices in China and around Southeast Asia for several years.
In related moves, last month First Chicago NBD opened a branch in Singapore that also will serve as a headquarters for Southeast Asian operations and reached an arrangement with Standard Chartered Bank to provide cash management services to its customers in Thailand, Malaysia, and Indonesia.
The Chicago-based bank also is negotiating with Asia Commercial Bank and the ONG Commodities group to set up a brokerage company that will operate on the Hong Kong Futures Exchange.
Late last year, Citicorp became the first U.S. bank to open a branch in the Chinese capital, reopening an office that was shut down more than four decades ago. Other U.S. banks in Beijing include Bank of Boston Corp. and BankAmerica Corp, which have representative offices. BankAmerica, which has branches in Guangzhou and Shanghai and a representative office in Dalian, hopes to open another three to four offices in China over the next several years.
Big U.S. banks with offices in Asia have been joined by smaller regional institutions. Earlier this year, for example, Cincinnati-based Fifth Third Bancorp. opened an office in Hong Kong, while Star Bank Corp., also based in Cincinnati, established an Asian trade finance facility in Hong Kong in cooperation with the Hongkong and Shanghai Banking Corp., a unit of the London-based HSBC Group PLC.
Verne G. Istock, chairman of First Chicago NBD, said the two Asian offices will focus on capital raising, treasury services, trade finance, cash management, foreign exchange, derivatives and cash management.
"The expansion of First Chicago NBD's capabilities is being driven fundamentally by the growing international business needs of our customers," Mr. Istock said in a statement.
"These branches allow us to better serve not only our U.S. based- customers, but also Asian companies that want to explore entry or expansion of facilities in the Midwest."
The bank noted that exports to China from the U.S. Midwest increased fivefold between 1987 and 1995 to $1.2 billion, led by shipments of machinery and chemicals.
First Chicago NBD is the ninth-largest U.S. banking company with $106.7 billion in assets. The presence in China has steadily expanded since 1979, when predecessor First Chicago Corp. set up a correspondent relationship with Bank of China. A year later, First Chicago opened a representative office in China and then helped set up CCIC Finance Ltd., a joint venture with Bank of China, the Industrial Bank of Japan, and China Resources (Holding) Co. Ltd. that provides advisory services, arranges financing, trade finance, and equity investments, and helps underwrite new share offerings.
Analysts said that the move into China is closely linked to First Chicago NBD's efforts to expand services to its midwestern customers.
"My sense is that this is an integrated component of their wholesale focus," said Arthur P. Soter, a bank analyst at Morgan Stanley & Co. "What they're really doing is investing in their midwestern customer base.
