Portuguese-owned BNU is hungry to develop its regional banking business

STATE-OF-THE-ART delivery of modern services has helped the sector hold its own in the market

THOUGH SMALLER than Hong Kong, Macau still has a relatively sophisticated and diverse financial system that adheres to international standards and which offers a range of modern banking products, through a variety of state-of-the-art delivery channels.
In all, there are 22 licensed commercial banks and one offshore bank, plus an array of insurance, foreign exchange and credit institutions. Total assets of the local banking sector amount to some $18.2 billion. There is considerable stability in the financial sector, too, with the local currency, the pataca, pegged to the Hong Kong dollar.

The Macau banking industry has seen moderate, but sustained, growth in 2002, with both deposit and loan figures on the increase. In May, banks provided credit and loans totaling almost $4.5 billion for local institutions and individuals, roughly $40 million more than the previous month, according to the Macau Monetary Authority, the territory’s financial watchdog.

One of Macau’s leading retail banks, Banco Nacional Ultramarino (BNU), illustrates the innovation to be found in the local banking sector. It provides a wide range of services including credit cards, personal loans, investment services and corporate banking facilities.
The bank has also pioneered new services in internet banking. Last year, it became the first major retail bank to join forces with Asia’s first internet stockbroker, Boom.com, to offer its online trading infrastructure to account holders. The product handles international securities trading, back-office accounting, custody and support services – these
include 24-hour customer service, foreign exchange and credit facilities, and account management functions.

HERCULANO DE SOUSA Chief Executive Officer of Banco Nacional Ultramarino

But Herculano de Sousa, BNU’s Chief Executive Officer, believes that the battle for market share in Macau, like elsewhere, is not so much in delivering new products, but more in service quality.
“It is a cliché these days, but it’s true,” he says. “It is the only way we can make a difference. Of course, we’re always thinking about new things, such as our internet banking service, but I have no illusions. As soon as we come up with a great product, others will have it. The difference will be the service. This is the same all over the world.”

BNU has another major competitive advantage in its unique history in Macau: as a Portuguese institution it served as the colony’s note issuer throughout the twentieth century. Founded in Lisbon in 1864, BNU commenced operations in Macau in 1902.
As both a commercial and issuing bank, it has strongly contributed to the economic and social development of Macau over the past century, and has established a prized reputation. The Bank of China and BNU now share the function of note issuing, as officially-appointed treasury banks.

Portuguese-owned BNU has just come through a major reorganization, following a recent merger involving its parent company. In March 2001, the merger of its parent, also BNU, with Caixa Geral de Depósitos, led to the Macau branch becoming a locally incorporated bank, but still a wholly-owned subsidiary of the new entity, Caixa Geral de Depósitos. Mr. de Sousa describes the move as a kind of “declaration of independence,” even though he still has to report to his Portuguese shareholders.
The bank has handled the transition process well. Though it retains its Portuguese culture and ownership, times have changed forever, and it is now serving a predominantly Chinese community, a new generation of customers who appreciate the bank’s strong commitment to service.
The liberation of the bank has set the tone for the future and now BNU is hungry to develop its business in the territory.

Mr. de Sousa says that the bank is quite content in terms of its territorial coverage, with a network of branches and ATMs sprawled across the area. But it is looking to take a stake in the city’s long-term development. It is keeping a close eye on the various development projects springing up across the territory, including the giant Fisherman’s Wharf tourism project. BNU is one of the organizers of the funding structure being put in place to finance the project. “We don’t allow anything to happen in Macau that we don’t have a look at first,” he says. “We pay attention to everything that happens in Macau and we want to be a part of it. We want to be an important player.”

Other local players are also gearing up for the future. Delta Asia Financial Group, a family-owned organization founded in 1935, is in the process of building up its various divisions to offer even greater product depth.
Stanley Au, Group Chairman, says the bank is looking to reap the benefits from improved world growth in 2002 and the years ahead. It has set in motion a five-year plan that includes the establishment of a network of representative offices and financial advisory offices in Tokyo, Taipei, Beijing, Shanghai and Guangzhou, adding a life insurance arm to the group and listing Delta Asia Group (Holdings) Limited on the big board of the Hong Kong Stock Exchange.

In 2001, the company restructured its top management team, acquired a general insurance company (now Delta Asia Insurance Limited) and added a wealth management division to the group.
Mr. Au says: “We have been able to start the process of transforming the nature of our business from commercial banking and stockbroking alone into a comprehensive banking institution. Our core businesses now range from investment banking, including wealth management, to commercial banking, focusing on trade financing and small and medium-sized enterprise loans, as well as insurance.”