"That's our strategy, which will not be altered simply because of rivals' explosive expansion."

May Yan, a senior banking analyst from Moody's Asia Pacific, said Hang Seng's plan is in line with the situation on the mainland, where domestic banks dominate the mass market with a huge spread of networks while overseas banks attract high-end corporate and individual clients with their management and experience.

But compared with home rivals, "Hang Seng has to catch up in the mainland play."

For example, Bank of East Asia already has 31 outlets and plans to open 10 more in 2007.

Hang Seng Bank also plans to boost its mainland workforce. The lender, which currently has 550 mainland staff, will increase that number to more than 1,000 by the end of next year and over 2,000 by 2010.

When asked about acquisition opportunities, Or said: "We're open."

He said that the bank had been engaged in many discussions with mainland lenders two or three years ago, but refused to say whether any of these were still going on.

Johnson Fu, Hang Seng's head of mainland business, said it would be an difficult task to pass its corporate mindset and culture to a local player, indicating the bank would be cautious about its next acquisition.

An overseas bank is allowed to have stakes in two mainland banks, and Hang Seng now has an almost 16 per cent stake in the medium-sized Industrial Bank in East China's Fujian Province, which it bought in 2004 for 1.73 billion yuan (US$220 million).

(China Daily 12/13/2006 page11)

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