Banking aspirant eyes slice of Bank of China’s Aussie pie

George Lekakis

Bank of China’s rapid growth in the under-served Chinese-Australian consumer banking market is set to be challenged by a new Melbourne-based financial services aspirant.

Banking Day can reveal that Melbourne company Asia Pacific Capital Limited(APCL) last year applied for a banking licence with APRA, with a view to eventually becoming a full service bank aimed at Asian migrants.

If it secures a licence, the company plans to trade as Asia Pacific Bank, with former Bank of Sydney boss Julie Elliott as its foundation managing director.

Asia Pacific Bank is the brainchild of Chinese-born Melbourne businessman Kelvin Ho who is believed to have invested at least A$1million of his own cash to kickstart the enterprise.

According to ASIC records, the business has been building its capital base for about 12 months and had fully paid up equity of almost $5 million at the end of the June.

Former CBA executive Wayne Hoy, who has deep experience in Vietnam’s banking sector, was appointed chairman of APCL in January.

In May, APCL expanded its board to include two Chinese-born directors, Zhenyuan Qu and Michelle Jones.

The company states on its website that it is looking to provide online and mobile banking services in a range of language choices: “Unlike many of the neo-banks launching in Australia, APCL is not looking to change the banking market with a new mobile app. We are looking to properly serve a market segment that has been ignored in recent years.”

Bank of China’s recent success in Australia appears to be spawning a stream of banking rivals.

In December last year APRA granted Sydney-based startup – In1Bank – a restricted banking authority.

In1Bank’s founder James Tong says his company is looking to deliver “a bilingual digital banking service for the fast-growing but under serviced Chinese-speaking retail market”.

BoC has emerged as one of the fastest growing home lenders in the domestic market, after almost doubling the size of its mortgage book to $2.9 billion in the 12 months to the end of May.

This has been a remarkable performance given the sluggish conditions that have persisted in the Australian residential property market.

BoC’s market share gains appear to have been garnered from a line of homegrown lenders such as Bank of Queensland and Westpac.

Most of BoC’s asset growth is coming from resident Australian borrowers, via mortgage broking channels.

Since 2018 BoC mortgage products have been marketed through AFG, Connective and the NAB-owned Choice broker network.

AFG executive Mark Hewett said BoC’s products had added a new dimension to the aggregator’s lending panel.

“We’ve seen reasonably strong increases in flows to Bank of China through our broker network,” Hewett said.

“They are definitely marketing their products to a broad range of borrowers but it’s fair to say that the majority of their flow is coming from borrowers in the Chinese community.”

While BoC is actively engaged with the mortgage broking channel, its Australian board and management have limited their interactions with the business press.

The communications strategy is unique for an expanding Australian retail banking operation, with the chairman - former Keating Government minister Stephen Martin – electing to keep a particularly low profile in recent years.

BoC’s default approach to media relations seems to be focused on maintaining secrecy.

While the bank does not normally announce the appointment of new Australian directors, a spokesman was able to confirm yesterday that former senior CBA risk executive Tim Oldham joined BoC’s Australian board last month.