Claiming its place at the international trade finance table, First Union Corp. has formed a joint venture with an Indonesian bank to market the North Carolina bank's services through much of Asia.
As part of its agreement with Jakarta-based Lippo Group, First Union will be able to utilize six Lippo offices in Jakarta, Manila, Kuala Lumpur, Bangkok, Ho Chi Minh City, and Hanoi.
In addition, Charlotte-based First Union will open an office in Lippo Bank, Los Angeles, which primarily serves that city's Asian community. "We will benefit from being able to process letters of credit on the West Coast," said Steven Bash, who manages First Union's correspondent banking relationships overseas.
Andrew Oleksiw, managing director of First Union's international division, said the marketing agreement with the Lippo Group provides First Union instant access to an Asian network that competitors such as Citibank have laboriously built up over several decades.
"In one swoop, basically, we have the equivalent of the Asian network that some of our large money-center competitors have," Mr. Oleksiw said. "So we see this as the ability to quickly, cheaply, and efficiently extend our network throughout those countries.
"We could have approached it in a different manner by going country by country," Mr. Oleksiw added. "But this gives us a very quick way of getting into that market with a known entity."
The Lippo Group is an international diversified holding company with banking, insurance, real estate, and manufacturing subsidiaries located throughout Asia. In Hong Kong, it owns the Hongkong Chinese Bank jointly with the Chinese government.
First Union announced the formation of a joint venture with Hongkong Chinese Bank last October to support U.S. companies trading with Asia. Initially capitalized at $3.2 million, the joint venture - known as First Union HKCB Asia Ltd. - provides trade finance products and services to importers and exporters in the United States, China, and Hong Kong.
First Union, which has assets of $77 billion, processed more than $4 billion in trade finance transactions last year.