A China Construction Bank branch in Beijing. (File photo/Xinhua)
China Construction Bank is planning to carry the largest overseas acquisition in the history of China's banking industry, eyeing up potential targets in Europe, according to the Financial Times.
CCB chairman Wang Hongzhang said that the bank could spend US$15 billion on overseas acquisition in the hope of securing a 100% stake in a foreign bank, or at least a 30%-50% stake in a major European bank. Banks in the UK, Germany and France would be the preferred targets, Wang said.
The target bank should be able to operate international business on a reasonable scale instead of just focusing on its domestic market, said Wang, adding that such a company is more likely to be culturally adaptable.
Some banks nationalized during the financial crisis such as RBS and Commerzbank, in which the British government holds an 82% and 25% stake, respectively, could be good candidates for a CCB bid, said sources in the investment industry.
The largest overseas deal undertaken by a Chinese bank so far was the purchase of a 20% stake in South Africa's Standard Bank worth US$5.5 billion by Industrial and Commercial Bank of China.
China's banks and investment funds have experienced a number of unsuccessful overseas deals. Sovereign wealth fund China Investment Corporation bought a large amount of shares in US investment institutions Morgan Stanley and Blackstone before the financial crisis, while China Development Bank suffered huge losses from its investment in Barclays.
Chinese supervisory institutions have suggested domestic banks should be more cautious regarding deals with European financial organizations given the deteriorating European debt crisis over the past two years. Chinese banks have also been told to avoid foreign exchange transactions with some European counterparts.