The big questions about foreign China bank sales

Tjun Tang, partner and managing director at Boston Consulting Group in Hong Kong, is not quite so bearish – “We don’t think we’re going to see the same level of problems we’ve seen in the international banking system” – and draws a distinction between the bigger banks, whose exposure is chiefly to larger corporates, and the smaller city commercial banks which are likely to have larger small-to-medium-enterprise portfolios which may be more vulnerable.

All eyes are now on ICBC, where lock-ups on stakes held by Goldman Sachs, Allianz and American Express expire in April and October. Goldman’s presence in particular will be interesting here: it wears two hats in its stakeholding, one as a strategic partner (it is actively involved in training and cooperation in ICBC) and one as a private equity investor, including funds managed for other investors. Goldman itself does not appear in immediate need of capital but if the private equity team considered it a good time to leave, then we may see Goldman trim some of its stake, although a complete exit appears unthinkable.

And what of the future? Will foreigners still be welcome to come back in to Chinese banks? “There is a role for the foreign strategic investors, and they have played that role very well, but we are now in a new era,” says Tang. “There has to be some commercial logic as to why you would want a strategic investor to come in again, and if you are one of the big banks, it’s not immediately obvious what that rationale would be.”

To see this article in its published form, click here: http://www.euromoney.com/Article/2091363/BackIssue/70075/What-future-for-foreign-stakes-in-Chinas-banks.html