Categorized | Commentary

The American Rule, Alive and Well in China

Industrial and Commercial Bank of China (Public, HKG:1398), China Construction Bank Corporation (Public, HKG:0939) and Bank of China Limited (Public, HKG:3988) are all big finance in the world’s largest economy. From corporate banking to banking through a mobile phone, these dragons are moving from continent to continent, creating relationships and taking names.

These companies are the big players in China and around the world. They have opened up their doors to markets in countries thousands of miles away from the mainland. Some of these banks are concentrating on a relationship building strategy, while the others go after technological advances and proprietary advancements. Either way, there is a market to be captured due to the fact that other banks have practiced liberal lending standards and have been caught red-handed holding troubled assets and dragged the rest of the world halfway into a recession. These Chinese banks are doing what any conservative banking institution would do, lending to credit-worthy customers.

Industrial and Commercial Bank of China (ICBC) provides personal banking services, personal financing, corporate banking services, international financing, fund management, investment banking and much more. The company is very certain about its future and is actively promoting its international development strategy. ICBC has a 20% stake in Standard Bank of South Africa and has a stake in Seng Heng Bank of more than 79%. The company has branches across the world, which includes; Sydney Branch, New York Branch, Middle East and Doha Branch. By the end of 2008, ICBC established business institutions in 15 countries. The company has relations with 1358 overseas banks in 122 countries and regions around the world.

ICBC is heavily involved in e-banking with respect to a trading volume in 2008 of RMB 145.29 trillion. The company launched their second generation USB-Shield to further protect their clients from e-sharks. ICBC provides its clients with mobile banking and Personal Internet Banking. The company has 1.44 million clients for corporate internet banking in 2008 and 56.72 million personal internet banking clients. ICBC possessed 72 patents with respect to intellectual property which represented 55% of all patents in the industry. Industrial and Commercial Bank of China has a market cap of $2.01 trillion and their stock is currently valued at $6.01 per share.

China Construction Bank (CCB) is involved in corporate banking, deposit, credit loan, asset custody, annuities, trade financing, international financing, personal banking and various other services. The bank operates domestically in China and overseas as well. The company thought about expansion early on, but really got going in 2006 when it bought Bank of America’s Asia division. CCB is part of the Global ATM Alliance which allows people to use their ATM cards around the globe at other participating banks. The alliance includes Barclays, Bank of America, BNP Paribas, Deutsche Bank, Santander Serfin, Scotiabank and Westpac. In 2009, CCB opened a branch in New York City after having received approval from the NY State Banking Department and the Federal Reserve Board. China Construction Bank Corporation has a market cap of $1.58 trillion and their stock is currently valued at $6.77 per share.

Bank of China Limited (BOC) was founded in 1912 to replace the Government Bank of Imperial China. It is the oldest bank in China and now operates around the world. The bank operates in corporate financing, personal savings, loans, asset management, annuities, insurance and investment banking just to name a few. BOC offered the first credit cards in China in 1986 and the first telephone banking in 1991. The company was listed on the Hong Kong Stock Exchange in 2002 and a move towards reform in the banking industry. Aside from owning the 7th largest building in the world, BOC operates in 27 countries around the world. Bank of China Limited has a market cap of $1.07 trillion and their stock is currently trading for per $4.21 share.

These companies represent a change in attitude domestically and around the world. No longer will Chinese companies be strictly domestic. These companies are going around the world looking for someone who needs a loan or easier access to money. From e-banking corporate financing, these companies are diversifying their portfolios and opening up a check book when the rest of the world lies in a recession. These companies are definitely pursuing the concept that China is the economic front runner of the world. Other banks are not able meet the needs of their customers because they are tied deep into a recession with the rest of the world. Whatever the reason, it is now China’s time to turn the tables.

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