Chinese banks stretch out global in 2007
Updated: 2008-01-03 10:16
A key feature of China's banking industry development this year has been waves of overseas expansion by China's commercial banks.
As of December 11, 2006, the protective period for Chinese banks following China's entry into the World Trade Organization (WTO) came to an end, and China's financial industry fully opened.
In the meantime, domestic banks started expanding overseas by launching initial public offerings (IPO) offshore, acquiring foreign financial institutions and opening overseas branches. Here are the major events in 2007:
I. Overseas listing:
- China CITIC Bank's dual listing
China CITIC Bank simultaneously listed in the mainland and Hong Kong stock markets. The bank accepted public bidding in Hong Kong between April 16 and 19, for its 4.88 billion H shares. It raised HK$28.63 billion (US$3.67 billion), a record in terms of funds raised by IPOs in Hong Kong.
Bank of China (BOC) launched the country's first A- and H-share dual listing in Shanghai and Hong Kong in June 2006 and the Industrial and Commercial Bank of China (ICBC) was listed in a similar style in October this year, raising a world record high in funds. Still, CITIC Bank's dual listing was a milestone as the first shareholding commercial bank to do so.
As the largest subsidiary of CITIC Group, China CITIC Bank had 70.68 billion yuan (US$9.64 billion) total assets by the end of last year, as the seventh largest bank in China. In terms of deposit balance and international trade settlement volume, it ranked second among the China's national commercial banks. CITIC Bank developed its comprehensive services platform with unique advantages, as a direct beneficiary of the organic cooperation between subsidiaries of the Group.
II. Overseas acquisition:
- CDB's buys into Barclays
On July 23, China Development Bank (CDB) and Barclays sealed a share purchase and strategic cooperation agreement.
Under the deal, on August 14 CDB initial investment of US$3 billion in Barclays for a 3 percent stake in the British banking giant, at 7.2 British pounds apiece, facilitated Barclays' bid for ABN Amro against a consortium led by Royal Bank of Scotland. CDB was able to send a director to Barclay's board.
If Barclays' bid for ABN Amro goes through, CDB will further invest between US$8 billion and US$10.5 billion in Barclays and raise its holdings to over 5 percent.
Under the partnership, Barclays will assist and advise CDB as it evolves into a commercially operated financial institution, the first of China's three policy banks. It will provide CDB expertise and advice in such fields as risk management, corporate governance, and information technology strategy and procurement.
Sources with CDB said the event was one of the most important steps as the bank commercializes. If the deal is completed as planned, CDB's Barclays purchase will be the country's largest outbound investment by a Chinese enterprise to date.
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