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CCB to purchase AIG's Hong Kong financial unit

By Wang Bo (China Daily)
Updated: 2009-08-13 10:13

China Construction Bank (CCB), the world's third largest lender by market value, inked a $70-million deal to buy a Hong Kong unit of American International Group (AIG) in a bid to obtain a firmer footing in the overseas market.

The bank will acquire 100 percent of AIG Finance (Hong Kong) Ltd, a wholly owned subsidiary of the New York-based AIG, which is expected to be transacted in October after approvals by regulators in Hong Kong and the US, said the bank in a statement yesterday.

The move is the Chinese lender's first overseas acquisition in three years after it spent $1.25 billion to buy 17 outlets of Bank of America in its Hong Kong and Macao units in August 2006.

Guo Min, banking analyst at Shanghai Securities, said the bank has taken the deal as a bridgehead to expand its global footprint.

"By getting a solid footing in Hong Kong, the bank could see an expansion into the Western market as the next step," she told China Daily.

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AIG Finance, with $1.19 billion in total assets as of June, is a restricted license bank in Hong Kong, offering financial services including time deposits, mortgages, private car loans, premium financing, personal loans, credit cards and various credit facilities.

AIG Finance's core business in Hong Kong is credit cards and it has a total of 480,000 credit card holders there, forming 5 percent of the city's entire credit card market.

"The acquisition will get us a sound credit card business platform and enhance our business composition and service capacity in Hong Kong and Macao," the CCB said.

Hailing the deal as a milestone in the bank's overseas expansion, CCB said the deal would boost the value of its entire business assets in Hong Kong and Macao to $25.8 billion and increase its staff in the region to 2,000.

The CCB now has outlets in New York, London and a representative office in Sydney, and is seeking a banking license in Vietnam. Revenue from outside the Chinese mainland only accounted for 1.7 percent of China Construction Bank's total in 2008.