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CMB sets up first overseas branch
By Liu Weiling and Hu Yuanyuan (China Daily)
Updated: 2006-03-09 06:33
New York will be home to a new branch of China Merchants Bank Co (CMB), which
recently received the regulatory go-ahead to open its first banking arm
overseas.
CMB, one of the country's leading joint-stock banks, said it seeks to boost
brand awareness ahead of its planned listing in Hong Kong.
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Facts and
figures
CMB has signed at least three technical co-operation deals with
foreign lenders in terms of training and retailing banking business.
Established in 1987, CMB has become the nation's sixth-largest lender
with more than 400 outlets in 30 Chinese cities. The bank is known for its
online banking and credit card
services.
| The Shenzhen-based lender will
upgrade its representative office in New York to a branch that can offer lending
and deposit services, it said in a statement to the Shanghai bourse yesterday.
China's biggest lenders, including Industrial and Commercial Bank of China
and Bank of Communications, are expanding overseas to diversify income and
improve profitability as an increasing number of foreign banks have entered the
domestic banking sector and eroded profit margins.
According to China's commitment to the World Trade Organization,
foreign lenders are allowed to run RMB businesses from the end of this year,
posing a major threat to domestic players.
As part of its global expansion plan, China Merchants Bank is also looking
for acquisition opportunities to tap into the Hong Kong market.
Qin Xiao, chairman of the bank, told China Daily that his bank is
"interested" in entering the international financial hub and buying small and
medium-sized local banks.
"The bank we would like to take over does not need to boast huge assets,"
said Qin. "We pay more attention to its network, business and growing
potentials. And we are also concerned if we can take the controlling stake."
However, Qin does not think there are many acquisition opportunities in Hong
Kong, as most local lenders are not willing to sell stakes.
"We haven't entered into negotiations with Hong Kong lenders yet," said Qin.
"Our acquisition plan depends on opportunities and price."
Other Chinese lenders, such as China Minsheng Banking Co and China
Construction Bank, are also keen to enter the Hong Kong market. Both of them
wanted to buy the Asia Commercial Bank, which has 12 branches in Hong Kong, a
branch in Shenzhen and representative offices in Shanghai and Shenyang. Asia
Commercial Bank was eventually bought by a Malaysian bank for HK$4.5 billion
(US$592 million) last month.
To fund expansion, CMB will continue to get funds from the capital market.
"We will wait for a good time to float H shares in Hong Kong," Qin said. "But
the main purpose is not raising money but improving co-operating governance with
a more strict supervisory environment after the listing."
According to KPMG, an accounting firm that has done annual auditing for CMB
for several years, the bank is not likely to be listed in Hong Kong this year.
(China Daily 03/09/2006 page9)
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