HONG KONG, Dec 5 (Basis Point) - Industrial & Commercial
Bank of China is eyeing business opportunities in emerging
markets as the world's biggest bank by market value opens new
branches in Latin America, Eastern Europe and the Middle East.
ICBC last Friday opened a subsidiary in Peru, its first
wholly-owned unit in South America. And on November 12, it
became the first Chinese bank to enter Argentina, getting
approval from local authorities to take 80 percent of commercial
lender Standard Bank Argentina and its two affiliates, asset
manager Standard Investments and commercial service provider
In Europe in late November, ICBC opened branches in Warsaw
and Barcelona and a European private banking centre in Paris.
Earlier this year it acquired banking permissions for branches
in Riyadh and Kuwait.
It is also seeking to penetrate into Africa via
Johannesburg-based Standard Bank in which it owns a 20 percent
stake. Standard Bank is Africa's largest lender by assets.
"The rapid economic growth in emerging markets has brought a
new window of opportunity for Chinese banks' overseas business,"
said Bin Wu, ICBC's general manager, international banking
department, in an email interview with Basis Point as he
travelled from one branch opening ceremony to another.
Given its track record in the US loan market, where ICBC
opened its branch in late 2008 and snapped up over US$1 billion
of loan assets within a year, the Chinese bank is expected to
have similar ambitions in these new markets.
This year, the bank has been actively involved in deals for
Last month, ICBC joined as mandated lead arranger in PT
Garuda Indonesia's US$120 million two-year club loan with Bank
of China and five other foreign banks.
In August, it led a US$200 million eight-year club with
China Development Bank and HSBC for another Indonesian name, PT
Krakatau Steel Tbk, to finance a blast furnace plant complex in
the Southeast Asian country.
The bank also participated in a US$300 million three-year
dual-tranche term loan for Mongolian Mining Corp in April, which
was led by Standard Bank Asia.
"We have made new breakthroughs in key target markets by
acquiring banking permissions or through mergers and
acquisitions," Beijing-based Wu said. "We will expand in
emerging and developed markets simultaneously."
To date, the bank has subsidiaries and branches in 37
countries and regions.
Aside from emerging markets, ICBC on November 29 opened its
American operation, ICBC (USA), which was established by
acquiring 80 percent of Bank of East Asia(USA) and thus
obtaining local retail business permission, which ICBC's
existing wholesale licence did not provide.
Immediately after gaining that US wholesale licence in 2008,
ICBC joined several syndicated loans for investment-grade names
with large tickets of several hundred million, including for
Pfizer, Wal-Mart, Southwest Airlines, Harvard University, Dell
and UPS, according to Thomson Reuters LPC data.
Over the years, the bank, via its long-established offices
in London, Singapore and Hong Kong, has led or participated in
financings for big international names such as British Airways,
Trafigura and Yum! Brands.
According to data provided by ICBC, its overseas units had
total outstanding assets of US$154.46bn at the end of September,
with a 0.45% NPL (non-performing loan) ratio.
SUPPORTING CHINESE NAMES
As China's biggest state-owned commercial bank, ICBC puts
great emphasis on supporting Chinese corporations' outbound
business, Wu said. "Chinese corporations have made rapid
developments in stepping outside the border, which lays a solid
foundation for banks' client base."
Wu said ICBC this year has provided financings for China
Three Gorges Corp to buy a 21 percent stake in Portugal's
energy firm EDP, which cost the Chinese energy giant 2.7 billion
euros (US$3.53bn), and for Sany Heavy Industry Co Ltd's 360
million euro acquisition of German concrete pump
The bank has also participated in CNOOC's US$6 billion
12-month bridge financing for its US$15.1bn acquisition of
Canada's Nexen, according to Thomson Reuters data. The deal is
pending regulatory approval from Canada and the US.
"ICBC will explore opportunities in resource-related
structured finance, overseas merger and acquisition financing,
overseas project finance and buyer's export credits on a global
scale," Wu said.
ICBC has an "A" long-term issuer credit rating from Standard
& Poor's and an "A1" long-term foreign currency bank deposit
rating from Moody's. For the nine months to September, the bank
reported net profit of Rmb185.6 billion (US$29.8 billion). Its
third-quarter profit was Rmb62.44 billion, up 15% year on year.