ICBC, Making First Foray Into U.S. Retail Banking
Industrial and Commercial Bank of China Ltd. will proceed cautiously in its drive into U.S. retail banking as it expands globally, Jiang Jianqing, chairman of China's largest commercial bank, said in an interview with The Wall Street Journal.
"In the foreseeable future, our focus will be mainly on emerging markets, which have good prospects for growth. For the American market, we are walking in a very careful way," Mr. Jiang said on the sidelines of World Economic Forum meeting here.
ICBC, the world's largest bank by some measures, last week agreed to acquire an 80% stake in Bank of East Asia Ltd.'s U.S. subsidiary for $140 million.
The pact puts it in position to become the first Beijing-controlled financial institution to acquire retail bank branches in the U.S. Bank of East Asia, a publicly traded company based in Hong Kong, has a total of 13 branches in New York and California.
Earlier Thursday, Mr. Jiang joined other Asian and European bankers in a meeting with U.S. Treasury Secretary Timothy Geithner in Davos. Mr. Jiang said he told Mr. Geithner that Chinese companies want to invest in the U.S.
A person familiar with the meeting said Mr. Jiang added that he wanted the process to invest in the U.S. to be simpler, to which Mr. Geithner responded that the U.S. welcomes investment as long as it meets regulatory protocols.
The Bank of East Asia acquisition deal was "small potatoes," Mr. Jiang said, considering that Beijing-based ICBC, which is 70%-owned by the Chinese government, has 11 trillion yuan in deposits in China, or nearly $1.7 trillion.
Regulators could still block the deal.
Though small in size, the Bank of East Asia deal marks another sign of China's growing global ambitions, in addition to the slow opening of its own financial system to international finance.
Liberalization of the yuan, which is blocked by currency controls from free movement abroad, is an "irreversible" process, Mr. Jiang said.
He said he believes the yuan eventually can be a global currency, and possibly even a reserve currency, something he said will benefit ICBC, considering the hoard of yuan deposits it commands.
"It will bring us a lot of opportunities if this becomes a regionally or globally important currency," he said. "We are expecting and exploring to see whether there are opportunities of yuan business in America."
Mr. Jiang made his global ambitions clear, though he said the drive would proceed "carefully and cautiously" over a long period.
He boasted of ICBC's market capitalization, the largest of any bank in the world, though only a relatively small proportion of its shares trade, given the government's large stake.
ICBC has become increasingly comfortable venturing outside its home markets, which still account for the bulk of its profit.
In 2008, the bank purchased a stake in South Africa's Standard Bank Group.
Mr. Jiang highlighted African markets as one of his top priorities. "The economies of China and Africa are supplementary," he said. "We think Africa will become a very important driver of global growth."
Mr. Jiang largely dismissed growing international concerns that China's economy and lending markets are overheating, which could lead to an even-steeper surge in already high inflation.
Chinese authorities, including the People's Bank of China, are taking "concrete steps" to control the growth of liquidity in Chinese financial markets, including substantial increases in reserve requirements for banks, he said.