ICBC realigns financial services to meet client needs
(7 November 2016 – China) China's largest State-owned commercial bank, by assets, Industrial and Commercial Bank of China Ltd (ICBC) has outlined plans to adjust its financial services in light of Chinese companies transitioning from acquisitions of natural resources to technology advancement and industrial upgrading in more diversified countries.
The banks says that the number of cross-border mergers and acquisitions it conducted for information technology, high-end consumption and industrial sectors increased to 66 percent in the last year.
"As China has entered the stage of moderate-speed growth, Chinese companies are transforming from scale expansion to quality enhancement and breakthrough innovation. Their demands for high-end technologies, advanced products, core patents and ripe management experience keep increasing along with the demands for overseas asset allocation and the integration of upstream and downstream industry chains," said Li Feng, general manager of the ICBC's investment banking department.
In a response to the need of its corporate customers who are going global, the ICBC now provides investment banking services including deal making, due diligence investigations and post-merger integration through a broad client base in and outside China. The bank also offers localised commercial banking services, such as debt restructuring, global cash management and settlement, via its branches in the host country of a takeover bid.
Additionally, the bank said it provides multiple financing portfolio solutions including M&A loans, equity investment and the introduction of strategic investors to help the clients complete cross-border acquisitions and effectively control their financing costs.
The amount of Chinese companies' cross-border M&A reached US$79.3 billion (A$105 billion) in Europe and North America last year, doubling the 2011 figure. In resource-oriented regions like Africa and South America, the amount of M&A by Chinese companies fell 84 percent to US$2.1 billion.
"It shows that Chinese companies are increasingly eager to acquire comprehensive resources, apart from natural resources, of companies in the leading sectors of developed countries," Zhang said at a recent forum on cross-border acquisitions.
Another trend is that private companies are gradually taking a leading role in overseas M&A. Compared with State-owned enterprises, private companies lack sufficient experience in overseas M&A and are less capable of operational integration, according to the ICBC.
"Drawing on our strengths in the global network and the interactions between commercial banking and investment banking, we provide various financial services to clients during the entire work flow," Li said.
"By highlighting on post-merger synergy of both parties and the possibility of successful integration, we help the client introduce strategic investors and balance risks and returns."
Subscribe