China's Largest Bank Eyes Thailand
Banking
China's Largest Bank Eyes Thailand
Hana R. Alberts
09.30.09
ICBC inches toward its goal -- global expansion -- by offering $544 million for a Thai bank.
https://teakdoor.com/images/imported/2009/09/616.jpg HONG KONG -- In its latest attempt to become a global operation, China's largest bank moved Wednesday to take over a small lender in Thailand.
The Industrial and Commercial Bank of China (ICBC), the country's largest lender by market capitalization and total profits, announced late Tuesday that it would purchase Bangkok Public Bank Company's entire stake--19.3%--in Thailand's ACL Bank. At the same time, according to a statement, ICBC will extend an offer to all of ACL Bank's shareholders to buy out all of their holdings at the same price, 11.50 baht (34 cents) per share. That amounts to about $544 million.
ICBC oversees $1.7 trillion in assets and operates 16,320 outlets in mainland China as well as 143 overseas branches and subsidiaries, including in Indonesia, Hong Kong, Macau and Singapore, the statement said.
By contrast, ACL Bank, which is based in Bangkok and caters to businesses, boasts total assets, loans and deposits of $1.9 billion, $1.4 billion and $1 billion respectively.
"It's good for ICBC," said May Yan, China bank analyst for Nomura Securities. "ICBC's strategy to buy banks in emerging markets in particular, and this is ICBC's big ambition, to go global. And it follows their clients, to go to countries that they do business. This is no surprise."
The deal has been in the works for a long time, Yan said, and benefits ICBC by not only adding Thai customers to their roster but offering more services to their Chinese customers who do business there.
In June, ICBC announced a share swap that won it a stake in the Bank of East Asia ( BKEAF - news - people ) in Canada. To break into another emerging market, South Africa's, ICBC bought a 20% stake in Standard Group, and it also bought Bank Halim in Indonesia last year. Even as consumption and demand in China remains strong as a result of a hefty stimulus package and lenient bank landing, ICBC is looking to other markets.
"This transaction will be of great significance to ICBC in the expansion of its business and network in the Mekong River region and also the South East Asia region," ICBC's chairman, Jiang Jianqing, said in a statement.
In the first half of 2009, even after seeing a drop in income, IBC's total assets increased, as did total loans and advances to customers, according to a Sept. 29 report on its 2009 interim results.
In what has been called the biggest IPO ever, Beijing-based ICBC raised $22 billion on the Hong Kong stock exchange in 2006.
Chinese investors Wednesday had mixed opinions on the deal. ICBC has A-shares on the Shanghai Stock Exchange and H-shares on the Hong Kong stock exchange. In afternoon trading, the A-shares edged up 0.6% to 4.77 yuan (70 cents) and H-shares slid 1.3% to 5.86 Hong Kong dollars (75 cents). Meanwhile, ACL Bank's share price soared to 10.70 baht (32 cents), up 7%.
Aided by government funds that have helped shore up their balance sheets and kept monetary policy loose, ICBC's main competitors for market share are the Bank of China and China Construction Bank. ICBC also ranked 147th on the Reputation Institute's list of the world's 600 most reputable companies.
The transaction is pending approval from ACL Bank's shareholders as well as Chinese and Thai regulators.
forbes.com
