Beijing is urging Chinese financial institutions to push beyond emerging markets and buy up distressed banking assets in Europe.
In a landmark deal announced last week, Haitong Securities bought Portuguese Banco Espirito Santo de Investimento from bailed out bank Novo Banco for €370m. This is the first purchase of a European investment bank by a Chinese company.
According to Reuters, this marks a shift towards smaller deals with bigger controlling stakes on the part of China’s finance giants. According to its data, out of the $3.2 billion worth of overseas deals that China made last year, three three-quarters were majority stake purchases.
This change of approach helps Chinese firms to acquire European banking licences that accelerate growth and market penetration for the wider group, as well as gaining invaluable expertise, particularly in debt markets.
“Increasingly, Chinese financial firms are seeking control deals as a way to expand their global footprint,” said Mayooran Elalingam, head of Asia-Pacific M&A at Deutsche Bank. “Several distressed opportunities are available in euro zone economies and we expect the Chinese financial services sector to be active in these situations.”
The push is reported to be actively encouraged by the Chinese government as part of a strategy to increase overseas banking outlets and establish RMB as a key currency in international trade.
For now, the superpower’s finance industry appears to be testing the water with lower-value deals. Whether they will soon have the confidence to bid for Europe’s flailing commercial banks remains to be seen.
The US dollar and debt yields falling on the North Korea missile test, treasury being a top target for cyber criminals and why treasurers aren't into real-time payments all hit the latest headlines in the world of treasury this week. Don't miss our ten top news stories from around the world.
Chicago based Treasury Management System (TMS) vendor GTreasury and Sydney based risk and treasury management vendor Visual Risk have joined forces in a strategic alliance to ... read more
"Uncertainty is the enemy of deal-making", so it's no surprise that Europe and the Asia Pacific's insurance industry saw merger and acquisition deals fall in the first half of 2017.
One in five countries is set to hit their highest government debt levels in 17 years predicts Fitch, although there has still been a dramatic improvement in sovereign credit.