What future for foreign stakes in China’s banks?
Three key questions arise from the recent sale of stakes in Chinese banks by their global counterparts, two of them widely asked, one not. Observers are wondering what the impact will be on global banks’ relations with China, and what will happen when the lock-ups on foreign bank stakes in ICBC expire in April. Rather fewer are asking if, irrespective of the global lenders’ capital positions, this is anyway a good time to be bailing out of Chinese banks.
Did political pressure force Ken Lewis to pull CCB state sale?
As soon as Bank of America shelved a deal to shift some of its stake in China Construction Bank in December, many observers leapt to a swift conclusion: China had nixed the deal because it didn’t like the idea of the sale, or the timing. It is understood that Bank of America chairman and chief executive Ken Lewis pulled the sale after speaking with his opposite number at CCB, Guo Shuqing, but state pressure is unlikely to be the full story, as subsequent events have demonstrated. It appears that at least part of the reason was a technical and legal issue springing from the fact that Bank of America’s stake had been amassed in two different purchases with different lock-up periods, and it was unclear what rules on allocation of profits would apply to the mooted sale; the fact that the sale did go through less than a month later supports the view that it was a technical delay rather than a veto.