After completing stock reforms and listings, three state-owned commercial banks, Industrial and Commercial bank of China (ICBC), China Construction Bank (CCB) and Bank of China (BOC), are planning asset acquisitions overseas.

Reports on overseas acquisitions are widespread in the media lately.  One recent report said that BOC intends to invest US$2 billion towards acquiring a consumer financial institution in the United States.  As the plan is still in its preliminary stages, BOC has yet to select an acquisition target.

Since its successful listing in Hong Kong and the Mainland in 2006, BOC’s ambition to expand overseas has been apparent. In December 2006, BOC invested US$965 in acquiring 100% stakes from Singapore Aircraft Leasing Enterprise.

While CCB failed to acquire Asia Commercial Bank in 2006, it successfully acquired Bank of America (Asia).  ICBC acquired Indonesia's Halim Bank in late 2006.  In the new year, more reports have appeared concerning ICBC's plan to acquire small commercial banks in Hong Kong, potentially Wing Lung Bank or Chong Hing Bank.

"State-owned commercial banks' overseas expansion has become a new trend in the Mainland banking sector, said Zhao Xijun, deputy chairman of the China Normal University Finance and Securities Research Institute.  "Upon completion of stock reforms and listings, they would naturally seek higher operational efficiency at home and in overseas markets.  These banks are all listed overseas, and a certain degree of internationalization is needed to attract more overseas investors.  Compared with initiating new retail networks, acquisitions or acquiring controlling interests in overseas financial institutions is a more convenient expansion strategy. In many developed markets, foreign banks often encounter difficulties in fulfilling regulatory requirements and client resources. Direct acquisitions can avoid these troubles.”

Economic Information Daily