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LENDING & CREDIT | Roxanne Uy, China
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Are Chinese banks ill-equipped to acquire and run Euro banks?

The best that predatory Chinese banks could do is take over a struggling European bank and leave the management in place.

According to a report, experts say that Chinese banks are unprepared to run major Euro banks. While they are eager to make acquisitions, they may not have the managerial capability to run the European banks.

According to Justin Harper, market strategist at IG Markets, it’s ironic as Chinese banks have the financial fire power to take over struggling European banks which could be acquired at bargain prices given the eurozone crisis and their huge exposure to these debts.

However, he notes that the Chinese don’t have the knowledge of Western markets and experience of running European banks to succeed in the short term.
The problem is exacerbated because European banks are not in a healthy state and need strong leadership and financial management to recover from the eurozone crisis.

"This can only come from people knowledgeable about the inner working of European banks and their balance sheets, not Chinese outsiders. The best that predatory Chinese banks could do is take over a struggling European bank and leave the management in place until they learn the ropes much better before they take over day-to-day running of the institution. We expect to see more M&A action within Asia itself on the banking front rather than across borders," says Harper.

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