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LENDING & CREDIT | Staff Reporter, China
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CCB launches massive international expansion

China's second largest bank expects to complete an M&A this year and will accelerate its foreign expansion in succeeding years.

Wang Hongzhang, Chairman of China Construction Bank, said his bank wants an international presence befitting its leadership stature and will accomplish this aim through a spate of mergers and acquisitions in the next few years.

"As chairman of the bank I would expect to complete an M&A deal this year," Wang said. "The current status of our international presence does not correspond to the global status we are aiming for,"

"In the coming years, we would like to accelerate our overseas development. Now, we see the right conditions for expansion of our overseas business: the financial crisis, the European debt issue and strong growth in emerging markets."

Wang noted that CCB's strong capital adequacy ratio of 13.8% is the highest among China's Big Four state-owned banks and will serve as a sound basis for international expansion.

CCB's overseas assets today amount to just 4% of its balance sheet. CCB has only 14 branches or subsidiaries abroad, a miniscule presence compared to its other Big Four competitors such as Industrial and Commercial Bank of China that has operations in 26 countries.

Wang said CCB's focus will be to establish more branches in Europe and the USA. It intends to expand in the Asia-Pacific either by setting up new branches or through acquisitions. CCB will open an Australian branch in Melbourne this fourth quarter and will establish a presence in Indonesia and Malaysia.

CCB will establish a U.S. branch in San Francisco. In Europe, it will open a branch and a subsidiary in Luxembourg and has applied to open a Russian subsidiary.

"The bank's current priority is to accompany our clients going global," Wang said. The "going out" strategy has, however, faced challenges from regulatory barriers to entry in a number of markets.

 

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