Bank Scores Another First in China
A small San Francisco bank that was doing deals in China before President Richard M. Nixon broke through the Bamboo Curtain in 1972 has scored another first.
In April, the Bank of the Orient became the first U.S. bank to open a full-service branch in China, able to take selected deposits and make loans.
Located in the old port city of Xiamen, 300 miles north of Hong Kong, the tiny eight-person office represents the first U.S.-owned independent banking operation in China in nearly 40 years.
To the bank’s president, John Barclay, the branch is the natural result of a longstanding interest in China dating back to March, 1971, when Bank of the Orient began arranging letters of credit for exporters.
Other U.S. banks, including San Francisco’s huge Bank of America and Citibank of New York, have only representative offices in cities such as Beijing and Shanghai.
Caught Between Old and New
Forced to leave China in the aftermath of the Communist revolution of 1949, they and other major U.S. banks cannot transact business except through a government-owned bank, such as the Bank of China.
Bank of the Orient’s branch in Fukien province on the South China Sea is caught between the old and new.
Formerly known as Amoy, Xiamen (pronounced sha-men ) was the last stop in the 1940s for thousands of Chinese fleeing the Communists--as well as Fukienese eager to leave the poverty of their mountainous province--for new lives in Taiwan, the Philippines, Malaysia, Indonesia and the United States.
Family ties have kept a steady trickle of Chinese yuan and U.S. dollars flowing through the Bank of the Orient since its founding in 1971 in San Francisco by a Philippines-born Chinese. “The Chinese . . . have a sort of fatal attraction for the homeland,” Barclay said.
Xiamen is also at the center of a special economic zone in which taxes, currency and other business restrictions have been eased in hopes of encouraging economic growth.
Opened Branch April 17
Barclay said it was the need for new capital that prompted the Chinese government in 1984 to consider permitting a U.S. bank to open a branch in Xiamen. China waived a requirement that Bank of the Orient, which has $215 million in assets, actually capitalize itself there--a move that would have required the transfer of $14 million.
But it denied the bank permission to take money from ordinary citizens, limiting depositors to the Chinese government, China-based U.S. subsidiaries or joint ventures between U.S. and Chinese firms.
After a nod from U.S. bank regulators, the Bank of the Orient opened for business in Xiamen on April 17.
San Francisco’s tightly knit, predominantly Taiwanese, anti-Communist Chinatown appears to have given the venture quiet approval, despite vocal protests in the past against visiting trade delegations from the mainland.
Some will boycott the bank, but most San Francisco Chinese want a more direct financial link to the mainland, said Victor Huang, a former banker who now runs a travel agency in San Francisco.
“We should have a branch office in mainland China. People need a bank to help develop their businesses and family relationships,” Huang said.
Barclay acknowledges that dissent exists. “There are some Chinese who are politically and emotionally affiliated with Taiwan, very dyed-in-the-wool Taiwanese, who would not do business with us,” he said.
