TORONTO — Bank of Montreal (TSX:BMO) has dipped its toe into China’s banking industry and is now exploring the next step, which chief executive Bill Downe says could include starting a Chinese wealth management division.
BMO hopes to grab a share of China’s rapidly growing middle class, a market segment that invests heavily in retirement savings plans and investment portfolios, Downe said Thursday from Beijing.
“Clients who are looking for investment management, financial planning, estate planning, succession and trust want to be able to tap into a bank that is headquartered in a strong jurisdiction with a long history,” Downe said.
He hopes that BMO’s reputation as a conservatively operated Canadian bank will help attract new customers.
Canada’s banking industry has suffered far less than its counterparts in the United States and Europe because it avoided many of the risky investments that collapsed during the 2008-09 financial crisis.
Downe was in the Chinese capital city Thursday for the opening of subsidiary Bank of Montreal (China) Co. Ltd..
The new division will allow BMO to offer its services to Chinese citizens who plan to emigrate to Canada, as well as multinational businesses looking to expand in the region, Downe said.
“We see those companies doing business in China ... and at the same time it’s reversible — it’s Chinese companies that are expanding into Latin America, the United States, Europe, the Middle East, Africa and Canada,” Downe said.
“We can represent those Chinese companies on a worldwide basis.”
Downe said he expects BMO China’s growth opportunities will likely come from joint ventures with local banks, rather than BMO branching off by itself. The bank already had a joint venture mutual fund business.
“On the most part those (joint ventures) would be relatively modest capital investments with a much heavier emphasis on knowledge transfer (and) sharing of intellectual capital.”
Other Canadian banks that have been drawn to China include Scotiabank (TSX:BNS), which boosted its stake in local bank Xi’an City Commercial Bank to 14.8 per cent last December, CIBC (TSX:CM) and Royal Bank (TSX:RY).
Manulife Financial (TSX:MFC), Canada’s largest insurance company, has a joint venture operation in the city of Jinhua and licences for five satellite offices in 11 provinces. It is also licensed in 43 Chinese cities, and has a 49 per cent interest in China-based ABN AMRO TEDA Fund Management Co.