Industrial and Commercial Bank of China, the world’s largest bank by assets, is attempting to increase the use of the yuan between Thai and Chinese customers through retail products and “dim sum” bonds.
The group wants ICBC (Thai), its arm in Thailand, to play a role in supporting the use of the currency among Thai and Chinese counterparts, in line with growing trade volume between the two economies, said Ye Hu, chairman of ICBC (Thai).
The move follows China’s strategy to strengthen the role of its currency in the global arena, in light of fluctuations in the key international units – the US dollar and the euro. The yuan is now the settlement currency between Chinese businesses and their foreign counterparts in some countries.
The rising annual trade volume between China and Thailand presents an opportunity for the bank to expand yuan-currency products and services to support local and global Thai business, as well as Chinese business, he said.
ICBC (Thai) currently facilitates corporate finance for Chinese and Thai investors in the two countries, and provides debit cards to Thai customers with activities in China.
“To increase yuan transaction levels among the two countries, we have to have more retail products in Thailand. We are launching our first credit card in Thailand by the end of the year,” he said.
ICBC Group is the world’s fourth-largest and Asia’s largest in terms of the number of cards issued, with a combined 76 million cardholders.
ICBC (Thai) introduced dual-currency debit cards in Thailand last year and has since built up 6,000 cardholders, most of whom are Thai students in China seeking exchange-rate flexibility, Hu said.
Credit-card business will be similar to debit-card business, he said, adding that dual currencies would make life easier for Thai customers who have activities in China and want to minimise exchange-rate risks.
Apichart Kasemkulsiri, senior executive vice president of ICBC (Thai), said the bank was not targeting market share or a specific number of credit cards issued, as it was very much dealing with niche customers.
“The credit-card industry in Thailand is extremely competitive; we might not offer as many benefits as local banks. We want to focus on customers who want more convenience in yuan currency exchange and cross-border trade settlement. Overall yuan transactions will be larger once there is yuan settlement, and this will boost the transaction level of the credit card as well,” he said.
The bank next year will also launch an ICBC automated-teller-machine card and a network of its own ATMs, besides which it is considering adding to the current 20 branches across the country to serve its retail-banking expansion, he said.
Meanwhile, ICBC Group considers that ICBC (Thai) and ICBC Asia, the Hong Kong subsidiary, can work together to approach Thai companies in connection with the launch its dim sum bond, a yuan-denominated instrument issued by a Chinese entity in Hong Kong.
Hong Kong is the global hub for yuan trade settlement, and the dim sum bond is one of the fastest-growing instruments on the market, Apichart said, adding that the bond would be attractive for Thai companies as the funding cost is lower than that for baht-denominated bonds.
Trade volumes between Thailand and China this year have supported the growth of ICBC (Thai), especially interest and fee income, and the bank is confident that net profit will be higher than the Bt695 million recorded last year, said the executive.