The Banking and Strategy Initiative

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Bubblecious Global Markets worried by China skinny dipping again? | Advantage China

CCB in the market with a $15B shopping Bag

Dealmakers are happy of course and US bank stocks jumped 3-5% on yesterday’s news that China’s no. 3 by assets and no. 1 by growth, China Construction Bank is looking for a global bank to purchase. China’s  shopping list as usual and the President can get me on that, China’s Shopping List as always is the biggest and the brightest stars , by extension from its  citizens’ and bureaucrats’ quest for the most expensive luxury items in cars and on High Street.

CCB has been seeing a lot of equity sales from erstwhile partner Bank of America but BofA still holds 1% in the Chinese lender, an event both claim to be proud of. However according to the Chinese news reports, the CCB chairman Wang Hongzhang put out a blanket request for a global bank .

“For example, if we could take Rmb100bn and acquire a financial institution that operates in all major countries and that accords with our international development strategy, then we’d take Rmb100bn to acquire it.”*”

The obstructions that did not present themselves in a last Chinese bank acquisition of Standard Bank in Africa by ICBC are likely to face the bank in this case esp if its shopping list includes government owned banks like RBS and UBS, though it will likely not face problems in buying German Commerzbank or Spanish issue. The wishlist of course demands a global institution so a base case is prepared for any policy bottlenecks and avoids the bank ending up with a domestic franchise strong in one particular country. Fortunately, this selection criteria actually makes the path a little clear for the bank as it is unlikely to fall for objects of National Pride like Bank of America itself.

The whys and the wherefores

Chinese regulators would also be cautious about the onboarding of a suspect institution esp if it is one of those whose shares have fallen farther in the recent melee. According to the FT report( at one point after the string of losses in European investments including Fortis and Barclays, the banks asked to stop basic Forex transactions with Europeans too.

Credit Situation at the European Banks has aimproved in the latest BIS report after cross lending improved in double digits in the first half of the year . Two close LTROs had passed on a $1T into the system between November 2011 and February 2012

Meanwhile ICBC would continue to focus on Emerging Market Acquisitions in LAtin America and Africa . One would have thought Chinese, in true tradition would firt try to blanket cultural fits in their neighbouring countries which are also seeing complementary growth to their 7.5% annual clip but the state wide focus on Global dominance in Trade and Finance is likely more palatable in policy in Europe and US as attempted by CCB. China’s lending statistics for August in the meantime improved again after a recent bank rate cut by PBOC. Yuan is expected to grow its share of global trade to 30% in the next three years.




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