One of China’s big three is planning to venture out of the home country. In June, Industrial and Commercial Bank of China chairman Jiang Jianqing announced that the bank had applied to regulators in the U.S., Russia “and other places” to set up branches. He added that the bank was also interested in Brazil and India.
The strategy, if daring, makes good sense, say analysts. ICBC is awash in cash, having raised $21.9 billion from simultaneous offerings in Hong Kong and Shanghai last year. But there’s a limit to how fast it can grow at home. “Smaller banks can grow at 20 to 30 percent a year, but ICBC cannot — it’s simply too big, and it would cause the system to overheat,” explains May Yan, a Hong Kong–based banking analyst with rating agency Moody’s.
An international acquisition could help ICBC improve its return on equity, which stands at a mediocre 11.9 percent, adds Samuel Chen, a Hong Kong–based China banking analyst with JPMorgan. Chen reckons the bank will have at least $3 billion in cash at its disposal, even after hefty dividend payouts this year and next.
