As Xi takes on the world, where are the bank mergers to do it?

Chinese president Xi Jinping

October 25, 2017, marked 10 years since the formal announcement of ICBC’s $5.5 billion stake in Standard Bank of South Africa.

The deal is worth recalling, partly because it has not been surpassed in terms of China/Africa acquisitions in the intervening 10 years. 

It is also worthy of review because of the sometimes unexpected ways it has worked for ICBC. 

Even if you only look at it as an investment play, it has yielded a better return than any bond the bank could have put the money in; it has led it into $26 billion of deals in a decade; and it also unexpectedly created an opportunity to buy a ready-made global markets and Latin America business.

But it is also interesting for what has not followed it. The deal was expected to herald a decade of Chinese banks going out into the world and acquiring. That, largely, hasn’t happened. 

There have been exceptions, notably Citic Securities buying CLSA in Hong Kong, but that is still a Greater China play; and you might point out that HNA now holds 10% of Deutsche Bank, but HNA, whatever else it might be called, is not a bank (in fact it started life as a regional airline).