UOB sets up new branch in Kunming

Office workers pass a UOB branch in Singapore's central business district. [Photo/Agencies]

United Overseas Bank (China) Ltd, a wholly owned subsidiary of Singapore-based UOB, opened a branch in Kunming, Yunnan province, on Thursday in an effort to help Chinese companies expanding into Southeast Asia.

As the bank's third branch in southwestern China following its operations in Chongqing and Chengdu, the Kunming branch will use the advantage of its location in Yunnan province as a strategic node of the Belt and Road Initiative to serve Chinese companies that have a strong need to invest in Southeast Asia, by tapping into UOB Group's regional network and resources and exploring innovative financial products, said Christine Ip, UOB's chief executive officer for the Chinese mainland, Hong Kong and Taiwan.

The Kunming branch will soon launch a direct currency exchange service between the Chinese yuan and the Thai baht to help Chinese companies minimize currency risk and reduce financing costs, said Mark Yang, head of global markets at UOB in China.

"China has a great chance to successfully achieve the internationalization of the renminbi in Southeast Asia… A lot of border trade in Yunnan province is settled in the renminbi," Yang said.

"With a growing number of Chinese companies investing in Southeast Asia, their interest in using the renminbi for settlement will increase, so we are looking forward to providing direct currency exchanges between the renminbi and Southeast Asian currencies, such as Thai baht and Indonesian rupiah, along with approaches to hedge against currency risk," he added.

In recent years, Southeast Asian countries became attractive destinations for China's outbound direct investment with their advantages in raw materials and labor costs. Last year, China's direct investment in member states of the Association of Southeast Asian Nations reached $10.28 billion, accounting for 7.9 percent of its investment in Asia, according to the Ministry of Commerce.

UOB (China) signed memorandums of understanding with Yunnan Water Investment Co Ltd and Yunnan Provincial Energy Investment Group Co Ltd on Thursday, supporting their regional expansion and giving them access to its services including financing, cash management and investment solutions.

UOB has a strong foothold in Southeast Asia, with 155 outlets in Thailand alone. Since the founding of its foreign direct investment advisory unit in 2011, the bank has helped Chinese companies invest more than 200 billion yuan ($30 billion) in this regional market, said Peter Foo, president and chief executive officer of UOB (China). "The Kunming branch will focus on helping our corporate clients in Southwest China with their cross-border expansion plans through onshore and offshore solutions in areas such as cash management, foreign exchange hedging, and project and supply chain financing," Foo said.