Foreign Banks in China: A Love Affair Ends 外资银行撤资与中国同行说再见
I’ve watched with interest over these last few months as first Bank of America (NYSE: BAC) and now Goldman Sachs (NYSE: GS) end their love affairs with Chinese banks, reaffirming what many already knew: the great hopes that Western banks held out for these investments simply failed to materialize. Of course, the timing of the latest divestitures is more related to BofA’s and Goldman’s own capital woes than disappointments over their earlier investments in China Construction Bank (HKEx: 939; Shanghai: 601939) and ICBC (HKEx: 1398; Shanghai: 601398), respectively. Just a week after media reported a beleaguered BofA was mulling a sale of its remaining stake in China Construction Bank after already selling part of that stake earlier this year (English article), now more reports have emerged that Goldman is selling down more of its stake in ICBC. (English article) China bank shares have sunk somewhat in recent days in response to the news, but the prevailing sentiment seems to be more one of “who cares?” Observers are attributing the large exit by big foreign banks to a number of factors, including their need for capital and to reduce their exposure to Chinese banks’ and their volatile share prices. But at the end of the day, in my view this mass exit is all about disappointment. When the foreign banks first made these investments nearly a decade ago, they were hoping to find strong strategic partners who could help them tap the huge potential of China’s banking market. What they got instead was investments in big state-run elephants that had no interest in what their foreign investors had to say or offer, and continued instead to take all their orders from Beijing. Foreign banks finally woke up to that reality during the global financial crisis more than 2 years ago when the big Chinese lenders embarked on a massive lending spree under orders from Beijing. Going forward, look for these same foreign banks to quietly return to the market in the next few years, only this time they will target smaller, more commercially-focused banks that can act as true strategic partners in the promising China market.
Bottom line: The latest divestitures in big China banks by BofA and Goldman mark the end of chapter, which will be followed by a new round of investments in smaller, more commercially-oriented banks.
Related postings 相关文章:
◙ Beijing’s Financial Shufflle: Bankers or Regulators? 中国金融高层“大换血”
◙ Message to Beijing: Privatize the Big 4 Banks 对中国政府说：将四大银行退市吧
◙ ICBC Discovers China’s Latest Low-Cost Export: Currency 工行将从非洲人民币结算业务中获益
