Industrial and Commercial Bank of China (ICBC), the
world’s largest bank by market capitalisation, has snapped up a 20
percent stake in Standard Bank, South Africa’s largest banking
group, for ZAR36.7 billion ($5.6 billion), in the biggest overseas
acquisition by a Chinese company.
The deal represents ICBC’s third international deal in less than
a year and its first in Africa. It agreed in the summer to pay $583
million for 80 percent of Macau’s Seng Heng Bank and last December
it took a 90 percent stake in Bank Halim Indonesia for $10
million.
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ICBC’s Standard deal represents the largest foreign investment in
South Africa since the UK’s third-largest bank, Barclays, spent
ZAR30 billion to take control of Absa, South Africa’s
second-largest bank by assets.
“Trade between [South Africa and China] is booming, and that will
bring great business for us. Standard is an ideal partner for us,”
said ICBC chairman Jiang Jianqing.
As part of the deal, which requires shareholder and regulatory
approval, ICBC will have the option to nominate two members to
Standard Bank’s board, one of whom will become vice-chairman.
In a statement, Standard Bank confirmed: “ICBC’s proposed
investment is a landmark transaction for Africa, South Africa and
Standard Bank itself. The co-operation will be based on the
expansion of product offerings to the existing customer bases of
both partners and the creation and expansion of new businesses
built on the key strengths of the two partners.”
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By GlobalDataAs of 22 October, Standard Bank had more than 950 branches,
operations in 38 countries and more than 46,000 employees, with a
market capitalisation of ZAR145 billion.
In the first half of the year, Standard Bank’s profit before tax
grew by 31.4 percent to $1.6 billion, despite South Africa’s
economy showing signs of slowing down and a tougher regulatory
environment hitting the loans market.
According to Jacko Maree, CEO of Standard Bank Group, despite
tougher operating conditions moderating growth, his group’s
diversified sources of revenue growth and focus on risk management
should enable it to achieve a normalised return on equity of 24
percent (see RBI 580).
Citic and Bear Stearns sign
deal
Chinese investment bank Citic has announced plans to invest $1
billion in US investment bank Bear Stearns and form a joint venture
in Asia with Bear Stearns. The agreement comes amid speculation
that Bear Stearns could seek a partner following the summer’s
credit crisis, which badly hit its earnings. The deal, which also
provides for Bear Stearns to invest $1 billion in Citic, would pool
both companies’ businesses in Asia, excluding China.
In July, China Development Bank (CDB) and Barclays agreed a
strategic partnership by which CDB acquired a 3.1 percent stake in
Barclays for €2.2 billion ($3.15 billion).
In other recent outward investment, Minsheng Bank announced it was
buying 9.9 percent of California-based UCBH Holdings for more than
$200 million in the first strategic investment by a mainland
Chinese bank in a US bank, further underscoring the global
ambitions of Chinese banks. Minsheng also has the option to raise
its stake to 20 percent by the end of June 2009 in what may prove
to be a breakthrough deal. The investment is the first major
overseas move by Minsheng, which was the first private Chinese bank
to list on the Shanghai market.
“This may accelerate overseas acquisitions by Chinese banks this
year,” China Banking Regulatory Commission sources said. The word
in Beijing is that several similar deals are being readied by
Chinese banks.
China Construction Bank (CCB), which last year bought Bank of
America’s (BofA) 17 branches in Hong Kong and Macau for $1.2
billion, is also seeking acquisition opportunities abroad and wants
to establish a branch in the US. CCB’s co-operation with BofA, a
strategic investor in China’s second-largest lender by assets,
would not stop it from setting up operations in the US, including
those offering retail banking services.
The recent deals come at a time when China seems ready to
accelerate banking reforms and bring its financial services
industry into the mainstream global business.
