Chinese banks are increasingly looking to open or expand in Australia after the National Australia Bank (NAB) recently opened its first branch in Shanghai, according to lawyers in the finance field. “We are seeing the tentative first steps towards localisation of some of the PRC financing arrangements, which otherwise were predominantly Chinese in-country arrangements,” said John Mollard, M&A partner with Baker & McKenzie. According to lawyers ALB spoke to, the reciprocal relationship between Australian and Chinese banks is strengthening now that all ‘big four’ Australian banks, as well as Macquarie Bank, have operations in China. “They [the Australian banks] all have a China strategy and are now starting to think seriously about what it means,” said David Olsson, Beijing-based head of the China Banking team at Mallesons Stephen Jaques and head of the Australian Chamber of Commerce financial services working group for Beijing.
 
The Chinese banks are following their clients in the mining and resources industry to the Australian market, according to Mollard. “There are significant capital commitments by Chinese companies for mine and related infrastructure development, which requires local knowledge. Chinese banks are looking to service that market,” he said. The Bank of China, China Construction Bank Corporation and the International Commercial Bank of China have all opened branches within Australia. Three further banks, the Agricultural Bank of China, the Bank of Communications and the People’s Bank of China, have opened representative offices.
 
NAB is at the start of its China strategy, according to Olsson, and that strategy clearly takes into account the interest in out-bound Chinese investment in Australia. “[The branch opening] means their business is facilitating cross-border trade finance, supporting Chinese investment into Australia,” he said.  Conversely, the Australian banks need only have operations in one Chinese city to tap into a market as big as the whole of the Australia, Olsson added; and Australia is ‘in the line of sight’ of Chinese investors.
 
ANZ and Commonwealth Bank have also both been vocal about their China strategy. ANZ chief executive Michael Smith has adopted a retail approach, and openly announced a plan to become the number four foreign bank in China. CBA is also looking to expand its footprint in the region quickly. “The plan is to triple the number of county banks in China,” said David Cohen, CBA group general counsel. “We have set up two and we hope to have ten by the end of next year.”