NZX signs MOU with freshly-licensed Bank of China

NZX, New Zealand’s stock market operator, has signed a memorandum of understanding with the Bank of China to develop financial products, with a focus on the agricultural sector and capital markets.

The deal will see the stock market operator and one of China largest state-owned commercial banks develop and promote products to both New Zealand and Chinese customers, the Wellington-based company said in a statement. The signing of the memorandum was witnessed by Prime Minister John Keu and visiting Chinese president Xi Jinping in Auckland.

“The establishment of a formal relationship with the Bank of China highlights our desire to build strong capital markets and make a meaningful difference in wealth creation for domestic and international investors,” chief executive Tim Bennett said. “As China is New Zealand’s largest export market, it is important to build relationships and establish communication channels with Chinese based companies.”

The deal comes after BOC (New Zealand), a unit of the state-owned bank became the 25th lender to be granted a licence by the Reserve Bank of New Zealand on Tuesday, to be the third of the major Chinese banks to gain a New Zealand licence after China Construction Bank and Industrial and Commercial Bank of China.

Bank of China’s clients include COSCO, Bright Dairy, Huawei and Haier Group, which all do business in New Zealand, and counts former finance minister Ruth Richardson as a director. Former National Party minister Chris Tremain is chairman of the local unit.

“Bank of China is particularly strong in its agritech business and given that a third of all New Zealand’s exports to China are dairy products, this bodes very well,” Tremain said in a statement announcing the license. “The Bank of China sees this as the ideal time to launch their New Zealand business, contributing towards the combined trade of both New Zealand and China to an expected $30 billion per annum by 2020.”

Bank of China was ranked seventh by Tier 1 capital in a 2014 survey by the Financial Times’s The Banker magazine, the lender said.

Shares of NZX rose 0.8 percent to $1.23 and have declined 1.6 percent since the start of the year.

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