ICBC leads banks looking for overseas buys
Updated: 2007-10-11 18:06
China's big and cash-rich banks, led by Industrial & Commercial Bank of China (ICBC), are in talks to make acquisitions overseas.
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ICBC is in talks for a controlling stake in ACL Bank, a small Thai lender. A source said the Chinese bank had already finished due diligence but had not yet agreed on price.
ICBC, which raised $21.9 billion in the largest-ever initial public offering (IPO) last year, is also reviewing potential deals in South Africa and the Middle East.
Credit Suisse, which has a fund venture with ICBC, and Goldman Sachs, which bought a stake in ICBC before its IPO, are helping it search for deals in Europe, sources said.
ICBC is also in talks for a stake in a small bank in Vietnam -- attracted by a large pool of ethnic Chinese clients there, and is on the hunt for deals in Japan and South Korea to serve Chinese businesses there.
The bank has made its overseas aspirations clear.
"ICBC aims to transform itself into a diversified bank from a plain-vanilla one and focus on international business rather than just the domestic sector," Chairman Jiang Jianqing said in June.
In August, ICBC agreed to pay $583 million for 80 percent of Macao's Seng Heng Bank. It was advised by Goldman Sachs. Last December, it bought 90 percent of PT Bank Halim Indonesia.
Early this year, ICBC was in informal discussions with Korea Exchange Bank for a potential tie-up but gave up after HSBC Holdings Plc launched a bid to acquire KEB, the sources said.
"Eventually, ICBC wants to create a global network of wealth management services as more and more rich Chinese people are now travelling or living abroad," said a source close to ICBC. "Overseas expansion will also boost ICBC's corporate banking and international financing business," he added.
A roaring domestic stock market and a fast-growing economy have made China's State-controlled banks, once burdened with mountains of bad debt, among the world's most valuable.
ICBC is not the only Chinese bank thinking globally.
On Monday, China Minsheng Banking Corp, said it will buy 9.9 percent of San Francisco-based UCBH Holdings for more than $200 million in the first investment by a Chinese mainland commercial bank in a US bank.
China CITIC Group has held talks with Bear Stearns for a potential deal which may allow China's top financial conglomerate to set up a joint venture with the US investment bank or directly invest in it, industry sources said.
In July, China Development Bank, which lends at the direction of the government, agreed to pay as much as 9.8 billion euros for a stake in the UK's Barclay's.
Last month, China's central bank chief Zhou Xiaochuan urged Chinese banks to take stakes in overseas financial firms, saying it would support China's foreign investment policy and balance a flood of foreign money entering China's banking sector.
In the United States, ICBC has applied to the Federal Reserve for approval to open a branch in New York.
So far, only two Chinese banks -- Bank of China and Bank of Communications -- operate US branches.
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