IN DECEMBER 2006, Industrial and Commercial Bank of China (ICBC), China’s largest lender, acquired a 90% interest in Bank Halim, a small Indonesian lender. The deal hit the headlines, not because of its size – the consideration of $56 million is not even a rounding error on a balance sheet of more than $1.1 trillion – but simply because it happened at all. Chinese banks are entering the market for overseas acquisitions and they have immense firepower.
That firepower was demonstrated in a more meaningful way in August when state-owned China Development Bank announced a deal to invest up to $11.6 billion in Barclays Bank to assist in the financing of the UK lender’s bid to buy ABN Amro.
"There’s a lot out there for these banks to look at," says the head of financial institutions at a major investment bank, "with the big three banks, [ICBC, China Construction Bank (CCB) and Bank of China (BOC)], all in the top five or 10 banks by market capitalization, they certainly have the currency."
Arguably, these banks have too much money to invest, a problem that looks likely to intensify.