Banking News
- ICBC eyes emerging-market acquisitions
Date: 11-Sep-2007 Sources: (Shenzhen Daily)
INDUSTRIAL & Commercial Bank of China Ltd. (ICBC), the world's largest bank by market value, plans more acquisitions in emerging markets, chairman Jiang Jianqing said.
ICBC is also developing plans to branch out into financial leasing and trust services, Jiang said yesterday. China lowered the capital requirement for financial leasing companies to 100 million yuan (US$13 million) this year from 500 million yuan to help the industry develop.
Hong Kong and Shanghai-listed ICBC, with a market value of US$275 billion, is taking advantage of a stock price that's gained 20 percent in the past six months to expand abroad as overseas banks including Citigroup Inc. enter China. Declines in global banking shares triggered by mounting delinquencies on risky U.S. home loans offer takeover opportunities, Jiang said last month.
Beijing-based ICBC agreed Aug. 29 to buy 79.9 percent of Macao's third-biggest bank from billionaire Stanley Ho's Sociedade de Turismo Diversoes de Macao for US$582 million, its second overseas acquisition. The company has the option to buy 20 percent more from Seng Heng director Patrick Huen.
ICBC announced in December its first acquisition of a foreign bank, buying 90 percent of PT Bank Halim Indonesia with an option to purchase the rest after three years. At the end of 2005, Bank Halim had US$50 million in assets and 12 branches.
Jiang said ICBC will expand into investment banking, insurance and private equity once China allows banks to operate in those areas. During the next five to 10 years, China's banking regulator wants ICBC and other large State-owned banks to triple the share of revenue they get from commissions and fees, such as from selling insurance.
China's banks rely on interest margins, the difference between what they pay depositors and charge on loans, more than foreign rivals. Non-interest income was 10 percent of revenue at ICBC last year, and 18 percent at Bank of China. At U.S. banks, the ratio was 43 percent in 2005, according to China's banking regulator.
Jiang also said the bank has no plans to take private its Industrial & Commercial Bank of China (Asia) Ltd. unit in Hong Kong. The unit's stock rose 14 percent Aug. 23, a jump that may have been fueled by speculation of a takeover by its parent, Francis Lun, general manager of Fulbright Securities Ltd. in Hong Kong, said at the time.
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