Chapter 507: London Gold

Upon hearing the question, Liu Tianqi couldn't help but smile. Since taking over Jiuding Bank, he was most pleased by the daily surge in the number of new accounts and deposits—these two elements are the foundation of any bank.

"Chairman, thanks to the funds from the partnership with Jiuding Securities and the attractiveness of high deposit interest rates, our daily business volume has been at full capacity since we opened. Currently, the bank has 218,000 accounts. Excluding deposits from Jiuding Consortium's series of companies, the remaining deposits have reached 1.15 billion HKD!"

Liu Tianqi said, his tone slightly excited.

"Good!"

Hearing these figures, Xia Yu couldn't help but applaud Liu Tianqi, smiling broadly with appreciation.

Xia Yu remembered that when they acquired Guang'an Bank, the total deposits were only around 200 million HKD.

In such a short time, deposits from non-Jiuding entities alone had reached 1.15 billion, more than a fivefold increase. This clearly shows the rapid development of Jiuding Bank!

If this internal data were to be exposed, countless banks would be envious!

Feeling pleased, Xia Yu was curious about the amount of deposits from Jiuding Consortium's companies in Jiuding Bank.

With so many companies, the finances were complex, and it was impossible to inquire about each one and then tally the figures. Moreover, many funds were still awaiting payment processing and were temporarily held in various company accounts, so not knowing the exact amount was understandable.

However, since Xia Yu had set the requirement for all company funds to go through Jiuding Bank, no one was more familiar with the consortium's financial flow than Jiuding Bank.

Thus, out of curiosity, Xia Yu asked, "Tianqi, including the current deposits from our affiliated companies, how much is there in the bank's accounts?"

Liu Tianqi, familiar with the number, answered promptly, "The affiliated companies have a total of 470 million HKD in current deposits. The bank's total deposits amount to 1.62 billion HKD!"

"I've checked, and among all the local and foreign banks in Hong Kong, our bank ranks around twentieth in terms of deposit amount."

Xia Yu's eyes brightened slightly, nodding with a smile, very satisfied.

With the large number of banks in Hong Kong, both local and foreign, Jiuding Bank ranking twentieth in terms of deposits already makes it a large bank. Even at the bottom edge of the large banks, it is still a significant player.

In such a short period, Jiuding Bank had progressed from a small bank right after acquiring Guang'an Bank to a large bank, with rapid growth continuing. Xia Yu couldn't help but be pleased.

"However, Chairman, although we have such substantial deposits, it's still not enough. The funding needs of other affiliated companies are too large."

Liu Tianqi's smile faded, and he reported to Xia Yu with a serious expression.

Xia Yu nodded slightly, understanding. Leaving aside other factors, just the Jiuding Real Estate Group alone, if they were allowed to freely develop projects and acquire land, Jiuding Bank could not cover all their needs even if it loaned out all its deposits!

The real estate industry is like that; to grow and strengthen, it must have a powerful bank as a support.

"This cannot be rushed. Deposits should be absorbed gradually. Affiliated companies should borrow as needed. If it becomes unbearable, let the affiliated companies seek other banks. Jiuding Bank is still in its early stages, and the shortfall in funds is understandable. We are not yet in a position to absorb all the business internally."

Xia Yu said gently.

Liu Tianqi nodded and then added, "Chairman, I have some ideas. Please let me know if they are feasible!"

Xia Yu raised an eyebrow, leaned slightly, and said with interest, "Go ahead."

"While steady development is safe, I believe we can accelerate our bank's growth."

"Generally, banks need to ensure sufficient liquidity to handle sudden withdrawals and ensure that loans are given to sound enterprises that can be repaid on time, to avoid risk of losses."

"But our bank is different. As a fund turnover platform for the consortium, we can allocate the current deposits of various companies at any time. Moreover, with the consortium's backing, the likelihood of a run on the bank is almost zero."

"As for loan risks, they are very low. The bank's funds primarily serve the affiliated companies, all of which are top-quality firms. I believe under your leadership, Chairman, there will be no issues."

"Therefore, the two risks that other banks commonly worry about don't exist for us. I think we can expand at a faster pace compared to other banks."

Xia Yu nodded and said, "You make a good point. So, how do you propose to accelerate the expansion?"

Liu Tianqi solemnly suggested, "Acquire other banks!"

Xia Yu's gaze sharpened as he looked at Liu Tianqi's determined and calm eyes, nodding gently and commenting, "That's a good idea. Choosing the right acquisition targets can indeed lead to a substantial short-term increase in the bank's assets."

The assets of a bank differ from those of ordinary companies.

Ordinary company assets are their own assets, but a bank's assets are of various types and can be summarized as its own net assets and managed assets.

Net assets refer to the bank's physical assets and earnings, which are usually quite small.

Managed assets, on the other hand, include depositors' funds, assets pledged for loans, and assets recovered from defaulted loans.

Generally, a well-developed bank with 10 billion in managed assets would have a value of around 1.5 to 1.6 billion. 

For a poorly performing bank, its value might be about one-tenth of its total assets.

Thus, Jiuding Bank could easily spend 100 million HKD to acquire a bank, leading to a surge in managed assets by 600 to 700 million HKD.

Acquiring a bank valued at 100 million would certainly increase Jiuding Bank's value by more than 100 million HKD. With proper acquisitions, the result can easily be 1+3 > 5. This is why many companies prefer acquisitions.

In a past life, Cisco grew its strength through aggressive acquisitions, with each acquisition elevating the company's strength to new levels, ultimately leading it to become the top company in the world.

Therefore, Xia Yu fully supported Liu Tianqi's idea.

However, now is not the right time!

Thus, Xia Yu shook his head, and seeing Liu Tianqi's disappointment, Xia Yu said, "Tianqi, your idea is good, and I support it. However, this period is not suitable for acquisitions. The bank's funds are better utilized elsewhere and have greater value than acquiring companies!"

Liu Tianqi's spirits lifted, and he looked at Xia Yu expectantly, asking, "Chairman, please give your instructions!"

Xia Yu narrowed his eyes and said clearly, "London Gold!"

Liu Tianqi was taken aback, then realized and asked with some uncertainty, "You mean that gold prices will rise sharply soon?"

Xia Yu nodded and said, "Exactly!"

Liu Tianqi furrowed his brow, deep in thought.