Banking

JPMorgan ponders China expansion

By Li Xiang (China Daily)
Updated: 2010-09-09 16:46

BEIJING - JPMorgan Chase & Co will make a substantial investment to build its corporate banking business in China in a bid to win more large foreign multinational clients as well as Chinese companies with rising global ambitions, said a senior executive of the US bank.

JP Morgan will invest about $100 million this year to expand its global branch network and a substantial proportion of this will be in China, Gregory L. Guyett, chief executive officer of JP Morgan's Global Corporate Bank, told China Daily in a recent interview.

At the end of last year the US bank launched an initiative to accelerate its global corporate banking business aimed at increasing revenues from markets outside the US to gain a competitive edge over weakened competitors such as HSBC and Citigroup after the financial crisis.

Emerging markets such as China, Brazil and India are the top priorities of JP Morgan's global expansion strategy.

"We want to emphasize to our clients in China that we have broad capabilities beyond mergers and acquisitions and equity offerings. We have products in debt financing, treasury management, commodities and hedging as well," he said.

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The US bank currently has five branches in China and plans to expand the network in the next few years to help Chinese companies gain access to the international market and to serve foreign multinationals in China.

Backed by the bank's strong capital position after it acquired US banks Bear Sterns and Washington Mutual during the financial crisis, Guyett said that the bank plans to increase its share of the global market at a double-digit rate over the next five years.

"We have a very strong capital position so we have the ability to support our clients with our balance sheet," he said.

"Some of our competitors around the world coming out of the financial crisis are not nearly as strong and capable," said Guyett.

In the meantime, Guyett pointed out that one of the fastest-growing businesses that help give JP Morgan a competitive edge over its rivals in the corporate banking sector globally is commodity trading.

"We have invested several billion dollars over last two or three years to build a first-class global commodity business," he said. "We believe commodities is one area where we have broader and deeper capabilities than many of our competitors."

In July, JP Morgan spent $1.6 billion on the acquisition of the oil, metals and non-US energy operations of Sempra, an energy-trading arm of the Royal Bank of Scotland.

The deal is expected to double the number of corporate clients JP Morgan's commodities franchise can serve and enables the bank to offer more products in more regions of the world.