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Chinese banks can seek new M&A deals

By Ma Zhenhuan (China Daily)
Updated: 2009-10-12 08:01

Chinese banks have a golden opportunity until 2012 to pursue mergers and acquisitions (M&As) to become world-class financial institutions, according to a recent report from management consulting firm Accenture.

"When we ask various bank executives in Asia-Pacific and Europe, most said that Chinese banks will play an influential role in changing the global banking landscape. Chinese banks are always No 1 in their minds," Pascal Gautheron, Accenture's managing director for the banking industry in the Asia-Pacific region, told China Business Weekly in an exclusive interview.

"Bank executives said that if China's 'Big Four', or even secondary Chinese banks, decide to go after certain Asia-Pacific markets, they definitely will have the capacity and can become a main competitor for other global banks in that area," Gautheron said.

The report was based on interviews with 35 bank executives, equity firm professionals and experts in developed and emerging markets.

In the wake of the world's financial crisis, the global banking industry will be significantly reshaped by 2012, the report stated.

For banks, bold moves are needed now to pave the way for higher performance in the face of profitability pressure, the report said.

Most bank executives interviewed agreed that there is overcapacity among banks in most markets, and thus more consolidation is needed. Banks will seek new and more flexible operating models to obtain higher performance levels.

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During that process, Asian banks, including Chinese banks, will have more opportunities to play the expansion and consolidation game across the Asia-Pacific region, Gautheron said.

Albert Chan, another Accenture partner, said the key lies in whether Chinese banks have built up the ability to launch overseas activities before 2012.

Since cross-border acquisitions are much more complicated than domestic acquisitions, Chinese banks should bear in mind certain key factors such as different operating models, cultural differences and local market knowledge, he said.

"I think these are all abilities Chinese banks need to put in place before they can make a successful acquisition," Chan said.

"Chinese banks need to work out an original model, not just a group of scattered banks in different countries, in order to enable them to compete with other global banks after 2012," he said.