The Reserve Bank of New Zealand (RBNZ) has given the go-ahead to Bank of China’s establishment of a local branch as a registered lender, enabling it to leverage greater financial resources in the country.
In an official statement RBNZ said that it had provided Bank of China with a branch license, making the lender one of 26 registered banks operating in New Zealand.
Bank of China already provides banking services in New Zealand via local subsidiary Bank of China New Zealand, which was registered in November 2014.
Local incorporated subsidiaries are distinct from bank branches however, in that they are distinct legal entities that have their own board of directors and must observe minimum capital requirements in New Zealand.
In contrast bank branches are an integral part of parent banks who partake of a far larger international balance sheet, giving them the ability to access great financial resources and dodge some local regulatory requirements.
“Capital and governance requirements for branch banks are established by the home regulatory authority,” said an RBNZ spokesman. “In Bank of China’s case this is the China Banking Regulatory Commission.
“There are no local capital or governance requirements for registered bank branches in New Zealand.”
According to Bank of China New Zealand the approval of a BoC branch license will enable it to expand its wholesale lending to local businesses, as well as give it greater latitude to participate in larger financing projects.
BoC NZ reported a net loss of $795,000 for the year to Dec. 31, as compared to a loss of $1.6 million the preceding year.
Net operating income was $21.6 million versus $8.7 million the year previously, while total assets were $1.7 billion as compared to $514 million 2016.
Analysts expect the bank to soon achieve profits given its rapid expansion in assets.