Belgium's KBC to incorporate in China, add branches

By George Chen

SHANGHAI (Reuters) - Belgian financial services provider KBC Groep NV (KBC.BR: Quote, Profile, Research, Stock Buzz) has decided to establish a locally incorporated banking unit in China, aiming to tap strong demand for wealth management services in the world's fastest-growing major economy, according to an internal memo.

KBC plans to increase the number of its branches significantly in China, where it now has only three -- in the major cities of Shanghai, Shenzhen and Nanjing, according to the memo, obtained by Reuters on Thursday.

The memo did not have financial details of KBC's proposed investments in China but a source familiar with the situation said the registered capital of KBC's China incorporation would be similar to that of other foreign banks which have already set up their locally incorporated units.

For instance, HSBC Holdings Plc's (HSBA.L: Quote, Profile, Research, Stock Buzz) (0005.HK: Quote, Profile, Research, Stock Buzz) China incorporation has a registered capital of 8 billion yuan ($1.14 billion), the same as Hong Kong's Bank of East Asia (0023.HK: Quote, Profile, Research, Stock Buzz), versus 4 billion yuan for Citigroup Inc (C.N: Quote, Profile, Research, Stock Buzz).

"It seems KBC has settled out a very aggressive plan in China to secure more wealthy Chinese clients after the launch of its fund management joint venture," said the source who declined to be identified as he was not authorised to speak to the media.

"Everybody is coming to China, no matter big or small, so (KBC) will not be a surprise," he added.

In 2007, KBC launched its fund management joint venture in Shanghai, KBC-Goldstate Fund Management Co, in which KBC, a major Belgian asset manager, holds a 49 percent stake.

So far the fund venture only manages one capital guaranteed fund, worth roughly 4 billion yuan.