Hong Kong King Wai buys Portuguese digital bank BNI Europa, tapping opportunity as Hongkongers seek overseas residency amid political crisis

By Cheryl Arcibalcheryl.arcibal@scmp.com / https://www.scmp.com/business/companies/article/3039119/hong-kong-king-wai-buys-portuguese-digital-bank-bni-europa?utm_medium=partner&utm_campaign=contentexchange&utm_source=EdgeProp | November 26, 2019 11:57 AM SGT
Conglomerate Hong Kong King Wai Group has acquired a digital bank based in Portugal, in a move motivated by Beijing's push to forge closer business ties with Portuguese-speaking economies and the rising demand from Hongkongers seeking permanent residency in Europe amid escalating unrest in their home city.
The group secured the approval of the European Central Bank in early October to acquire over 80 per cent of BNI Europa, which has assets and deposits of about 500 million euros (US$554 million) and operates in 13 European countries including Germany and the UK. Hong Kong King Wai did not disclose how much it paid.
"We believe that this acquisition will present several very promising opportunities," said Eric Huang, Hong Kong King Wai's deputy chief executive.
Once it receives all the permits it needs to start operating in Greater China, BNI will potentially be the only Portuguese bank to offer cross-border digital financial services in the Greater Bay Area (GBA) and belt and road countries. The GBA is Beijing's scheme to link Hong Kong and Macau to seven mainland Chinese cities to form an integrated economic hub.
Part of the company's plan for the bank is to open a physical branch in a GBA city " probably Macau, Zhuhai, Shenzhen, or Guangzhou " and another in Bangkok, as Asian clients often prefer something tangible instead of doing everything online.
Hong Kong King Wai owns Thailand-listed King Wai Group, a property company, and King Wai Insurance Public Company, the only Hong Kong non-life insurance company in the Thai market. It also has business operations in mainland China.
The company saw opportunity in the US$1 billion Sino-Portuguese fund launched in 2013, which sought to help enterprises based in mainland China and Macau expand into Portuguese-speaking countries and vice versa, particularly in industries such as infrastructure, transport and energy.
"One of the reasons for the acquisition is the macro trend of the Belt and Road Initiative. Because we are a Chinese-Hong Kong company we see opportunities out there, we see a lot of mainland Chinese and Hong Kong investment in western Europe including the UK, France, and Spain," Huang said.
"Obviously there is demand for foreign direct investments from Asia to Europe and those investments necessarily demand financing support. It's not just big corporates, but also lots of small and medium enterprises from Asia are active in Europe."
Beijing's belt and road scheme was launched in 2013 to build infrastructure to connect China with East Asia, Africa, and Europe.
The other rationale for the acquisition is the growing demand from Hongkongers to gain permanent residency in a European country, with their home city embroiled in its worst ever political crisis.
"This demand is also because of Europe's social welfare system, education system, and overall its stable environment and living conditions. It's a long-term immigration destination for ultra-high net worth individuals," said Huang.
In recent months, inquiries from Hongkongers about Portuguese property as a way to seek permanent residency increased by some 40 per cent as the violent unrest continued to roil the city, according to agents. Portugal is among a handful of European countries that are selling a fast-track residency programme through various investment options, including property.
Besides offering mortgage loans to those seeking residency in a European country via property purchase, the bank also seeks to offer Asian clients services such as wealth management, personal loans and credit card.
"If they choose the investment route, we can provide the [business loan] and also the advice for them on how to set up the business. For the property investment route, certainly we can provide advice because we operate out there and we know the local developers very well, and we can connect them with local lawyers," Huang said.
Agents based in Portugal, however, said property buyers from mainland China and Hong Kong rarely require mortgage loans to fund their purchase.
"They are usually cash buyers," said Bruce Hawker, director of Fine & Country, which has 10 offices in Portugal.
This article originally appeared in the South China Morning Post (SCMP), the most authoritative voice reporting on China and Asia for more than a century. For more SCMP stories, please explore the SCMP app or visit the SCMP's Facebook and Twitter pages. Copyright © 2019 South China Morning Post Publishers Ltd. All rights reserved.
Copyright (c) 2019. South China Morning Post Publishers Ltd. All rights reserved.