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RETAIL BANKING, WHOLESALE BANKING | Staff Reporter, China
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What does ING Bank's Aart Jan den Hartog leverage on to push the bank's Greater China growth?

He reveals how the bank specialises in China-Europe network connectivity.

Aart Jan den Hartog is the country manager Greater China and chief executive Hong Kong branch at ING Bank, with branches in Beijing, Hong Kong, Shanghai, Taipei, and the representative office in Ulaanbaatar reporting directly to him. He is responsible for driving the bank’s growth strategy for the Greater China region.

In this exclusive interview with Asian Banking and Finance, Aart talks about the strong Pan-European network of ING Bank and its plans to boost growth in Greater China.

How is Greater China different from Europe as a market and how ready is it to adapt to the bank's strategies and plans?
With the shift of global economic power to Asia in the last decade, we have seen an abundance of business opportunities and growing appetite for outbound activities by clients in the Greater China region. Clients have become more sophisticated and global, and continue to look for overseas investments, particularly in Europe, but also in other parts of Asia.

This plays to our strengths as ING is a global financial institution with a strong European base and an international network across 40 countries. We also have a solid network across the Asia region, with business presence across 14 markets. This means that we are able to support our clients—whether they are Chinese clients who are looking to invest overseas, or European and US clients who want to be a part of the Asian growth story.

China in particular, with its 2018 target growth of 6.5%, is one of the key markets for ING in the region. The huge potential of the Belt & Road Initiative, as well as the country’s ongoing market liberalisation and internationalisation, presents tremendous opportunities for outbound business coming from our existing and prospective Chinese clients.

At the same time, our financing expertise in focus sectors such as utilities & infrastructure, natural resources, real estate, trade & commodities, and transportation are aligned with many of the key sectors in Greater China. For example, we have led financing for pipelines and railcars in Kazakhstan, tollroads in Hungary, and ports in Europe and various logistics projects in China. This enables us to provide in-depth insights and advice and bring value to our clients.

What are the most pertinent challenges you have encountered in targeting Greater China growth? What challenges do you see coming?
The Chinese government has been reigning in speculative acquisitions and tightening controls on outbound foreign direct investments, especially in the real estate and entertainment areas. However based on government official statistics, we observe that the outward investments continue to be substantial—and supported—when aligned with initiatives like the Belt & Road Initiative and China Manufacturing 2025.

In addition, central banks are tapering their quantitative easing measures and the era of cheap money is coming to an end. This will lead to increased pressure on companies which will have to focus on increasing efficiency and optimsing their business models. We expect that this will in turn lead to increased M&A activity.

ING runs a global franchise, and is present in more than 25 countries along the Belt-and-Road. In addition, we have local expertise in many of the markets where our clients are looking for acquisition targets. We are therefore well-placed to support Chinese companies as they are ramping up activities.

Another challenge we face is due to technological change—digitalisation is changing the way we operate and deal with our clients. For example, in January 2018, we were involved in the first successful full agricultural commodity transaction using a blockchain platform, Easy Trading Connect. This was used to execute a soybean shipment transaction from the United States to China. The time spent on processing documents and data was reduced fivefold and the trade was concluded 4 days sooner than the paper based trade.

We have also launched ING Ventures, a EUR 300 million fund aimed at investing in fintech companies, as part of our innovation strategy. Currently, we have invested in around 20 companies. This includes WeLab, a fintech which provides consumer loans in China and Hong Kong in a fully automated process that takes minutes from application to approval.

How are you leveraging on the bank's Asia-Europe connection to push for growth in Greater China?
Europe continues to be a key investment destination for our Chinese clients whilst European clients continue to expand their business in Greater China, taking advantage of the growing demand in the region.

Combining our strong Pan-European network, our local expertise, and our sector knowledge, we specialise in China-Europe connectivity. For example, due to our knowledge in the food and beverage sector, we were able to provide our Chinese client with valuable propositions on the acquisition of olive oil companies in Spain and Italy. Our M&A teams in Asia and Europe worked closely with the client which led to a successful acquisition. ING was also the lead coordinator for the debt financing.

We provide our clients tailored solutions to access the markets and effective execution of transactions. We offer a wide range of financial services: specialised sector financing, financial markets, debt capital markets, trade finance, corporate finance, and M&A advisory.

Our mandate for growth is to expand our client base and enhance our lending capabilities and market coverage with bigger teams on the ground. Over the past year, we have grown our team with colleagues who have deep market expertise in China, so as to better support our clients.

We are dedicated to extending our full product suite available in Europe to our clients in Greater China. Going forward, we will continue to leverage on our local teams in different markets to advise on transactions, including potential M&A opportunities that tie in with our clients’ growth plans. Our focus is to provide effective and timely advice to our clients.

What goals will you be focused on in the next 3 to 5 years?
In China we have been providing financing and risk management solutions to top
institutional players, ranging from state-owned enterprises and privately owned Chinese companies to Hong Kong blue chips and multinational corporations (MNCs). Over the past five years, we increased our outbound revenues by over 30% annually. In mainland China, we have grown our Shanghai branch to become one of the largest foreign bank branches in Shanghai.

To accelerate this growth we are going to double our client base in the Greater China region by 2020, with a focus on clients who want to invest overseas.

Innovation and sustainability are also focus area for ING. We acted as Senior/Active Joint Bookrunner on China Development Bank’s debut International Green Bond issue, which was the first offshore green bond issued by a Chinese policy bank. We see growing interest in green finance amongst Chinese corporates, such as green bonds and loans. Following the positive reception our first 'Green Bond and Sustainable Finance Seminar' in Beijing event in Beijing last October, we will hold another client event in Shanghai in end April.

We have a dedicated Sustainable Finance team in Asia and we are here to support clients who want to move towards operating more sustainably. For example we have partnered Wilmar International Limited on its first sustainability performance-linked loan in Asia. If performance milestones are met, the interest rate for part of Wilmar’s existing bilateral, committed revolving credit facility with ING will be reduced for the following year.

What are the key business philosophies that guide you in your leadership role?
I believe in people and culture. Having the right talent with the right mindset makes all the difference in supporting clients and winning business. Our culture and philosophy centre around teamwork and fostering long term relationships, also through the industry cycles that our clients face. This means we are able to take a long term view and also means that we are a reliable partner.

Having the right culture also means that many of our staff are long-serving, in fact most of our team leaders have been with ING for at least 15-20 years. Many of our clients have been with us for decades as well. We therefore understand how to do business in the region and we understand what our clients are looking for when they expand their business or go abroad. This has helped build a high level of trust.

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