The Industrial and Commercial Bank of China (ICBC) is set to buy control of the UK arm of South African-based Standard Bank in a deal worth around $1.27 billion.
The move represents the first foray in the UK wholesale market by a Chinese bank, but it is thought to be a precursor to further investment in the future.
ICBC will buy an initial 60 per cent share of Standard Bank's global markets arm for $765 million, however a series of options are in place to buy the remaining 40 per cent over time.
The deal is expected to complete by the end of this year and will be subject to a series of regulatory approvals from the Financial Conduct Authority (FCA) and the South African Reserve Bank.
Jianqing Jiang, ICBC’s chairman, said: “The large amount of commodities trading and the consequential needs for hedging resulting from the development of the Chinese economy, as well as financial reforms such as the deregulation of interest rates and foreign exchange rates, along with the two-way opening-up of capital markets, have posed new demands for the transformation of the service capabilities and business model of Chinese banks."
By Claire Archer