Bank of E.Asia says China wealth rocks

By George Chen

SHANGHAI (Reuters) - Bank of East Asia Ltd. (0023.HK: Quote, Profile, Research, Stock Buzz) said on Monday it was seeking approval to allow its clients in mainland China to invest directly in Hong Kong stocks amid surging demand for wealth management services in the world's fastest growing major economy.

Bank of East Asia was also in final talks to buy a stake in a Chinese fund management company and a deal was expected soon, Lam Chi Man, executive vice president of Bank of East Asia (China) Ltd, told the Reuters China Century Summit.

Bank of East Asia (China) Ltd. is the wholly owned China subsidiary of the Hong Kong-based institution.

Last month, China said it will allow its citizens to invest in Hong Kong stocks for the first time, helping Asia's second-largest stock market .HSI to its strongest weekly gain in nearly seven years as investors held out hope for billions in investment inflows.

Bank of China's (601988.SS: Quote, Profile, Research, Stock Buzz) (3988.HK: Quote, Profile, Research, Stock Buzz) branch in the northern port city of Tianjin has been designated the initial gateway for the program, which is expected to prop up Chinese stocks listed in Hong Kong .HSCE.

Bank of East Asia, Hong Kong's fifth-largest lender by assets, also planned to set up a private bank in China in the fourth quarter, targeting individual clients with at least US$1 million of assets, Lam said.

"Since Chinese people are becoming richer and richer, as a result, their demands for wealth management services are also becoming higher and higher," he said at the summit held in Shanghai, China's financial hub.

"We've seen lots of business opportunities from such demands, and wealth management services will become a very important contributor to the bank's retail banking business in China."

Lam said that the bank had set up a special team to study and prepare for Beijing's new, landmark program allowing Chinese individuals to invest in Hong Kong stocks.

"We are very experienced about Hong Kong stocks as Hong Kong is our home base," said Lam, adding its Hong Kong-based brokerage arm will help Bank of East Asia's mainland clients to invest in Hong Kong stocks if it wins Beijing's nod for the business.

RETAIL IN FOCUS

In March, the China Banking Regulatory Commission gave four foreign banks, including Bank of East Asia, the green light to start locally incorporated businesses.

The others are: Citigroup Inc. (C.N: Quote, Profile, Research, Stock Buzz), HSBC Holdings Plc (0005.HK: Quote, Profile, Research, Stock Buzz)(HSBA.L: Quote, Profile, Research, Stock Buzz) and Standard Chartered Plc (STAN.L: Quote, Profile, Research, Stock Buzz)(2888.HK: Quote, Profile, Research, Stock Buzz).

Local incorporation is a requirement before Beijing will allow foreign banks broader access to China's retail banking market -- with around 16 trillion yuan (about $2 trillion) in household deposits.

Foreign banks which are not locally incorporated cannot issue bank cards independently though they are allowed to team up with domestic banking partners to issue co-branded card jointly.  Continued...