Bank of China

Developing a global role in Luxembourg

General manager Lihong Zhou says the Bank of China’s Luxembourg branch is poised to take on an expanded role for the institution in Europe as its global asset management platform and one of three hubs worldwide for its custody business. What makes Bank of China different from its competitors?

Why did Bank of China establish a Luxembourg office in 1979?

We were the first Chinese bank to open branches abroad after 1949, so when the government adopted a policy of opening to the outside world in 1979, while Luxembourg was expanding its scope as a financial centre, it was the right time for both countries. We serve local Chinese clients and Chinese companies looking to access new markets, but now the Luxembourg office acts as our European headquarters, co-ordinating activities in six countries. We have played a key role in M&A deals such as HNCA’s investment in Cargolux, or the acquisition of Philips’s lighting components business by GO Scale Capital. In the other direction, we helped Sweden’s Atlas Copco invest in several businesses in China and with Goldman Sachs arranged a syndicated loan to finance a pipeline in Turkey. Over the past five years, our assets, liabilities and profits have grown very rapidly.

How do you see the Luxembourg branch developing over the next five years?

Our business is growing by 20% a year and we continue to meet the targets of our three-year development plan; meanwhile we have little exposure to the volatility of the Chinese stock market. The good news for Luxembourg is that our head office in Beijing has decided that the grand duchy should be the asset management platform for the entire group, and one of three custody hubs alongside New York and Singapore. We already have 100 staff in Luxembourg, out of 170 in Europe, and the numbers should grow to 200 and 300 respectively. We will be ready to take advantage of the opportunities arising from the convergence of the Chinese government’s 2013 ‘One belt, one road initiative’ and the Juncker Plan in Europe.