BoCom seeks stake in overseas lender
Updated: 2008-03-11 07:11
By Kwong Man-ki(HK Edition)
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Bank of Communications (BoCom) is interested in buying a stake in a commercial bank overseas, the lender's chairman, Jiang Chaoliang, said yesterday.
But analysts said the move by the mainland-based bank could be risky.
Jiang said commercial banks in the US, Europe or Asia have drawn his interest.
"My team members have gone and taken a look (at Western banks) on my behalf," he told reporters during the annual session of China's parliament.
He added that BoCom would also consider a share swap with a foreign bank.
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Bank of Communications is interested in buying a stake in a commercial bank in either the United States, Europe or Asia. AFP |
Jiang didn't name any potential banks, but he did rule out HSBC Holdings, which holds a 19 percent stake in BoCom and may boost its holding if it becomes legally allowed to do so, Jiang said yesterday.
Patrick Shum, a strategist at Karl-Thomson Securities, agreed that it is a good time to seek acquisitions, but BoCom may need to take a risk in doing so.
"Yes, the asset is cheap, but we don't know if the banks have fully unveiled the impact caused by the US subprime woes or not," he said.
Shum warned that BoCom may be hurt if the subprime problem is worsening and further eats into the earnings of Western banks.
Shum said that Western banks must currently welcome capital from the mainland, but they may not regard mainland banks as a long-term partner.
"They may dilute the stake holding by issuing new shares once their problems are eased," Shum said.
Jiang said BoCom currently has no need to raise fresh funds because its capital-adequacy ratio is already too high and the bank is under pressure to increase investor returns.
HSBC joint ventures
BoCom is still in talks with HSBC about long-standing plans to set up credit-card and pension-fund-management joint ventures, Jiang said.
BoCom is HSBC's strategic partner on the mainland. The bank had held a 19.9 percent stake in BoCom, but the holding was diluted after a big share placing.
HSBC then purchased more shares of BoCom in October, raising its stake to 19 percent, below the current 20 percent regulatory limit.
Reuters contributed to the story.
(HK Edition 03/11/2008 page2)