Chinese banks encouraged to invest abroad

7 November 2007

Chinese banks should be making more foreign acquisitions in an effort to ease the impact of any economic downturn in China, the president of Industrial and Commercial Bank of China (ICBC) said.

According to Reuters, Yang Kaisheng, president of China's biggest lender, believes that investing in foreign opportunities will bring more security to the Chinese market.

"We're very optimistic that China's fast growth will last, and the domestic market will be the main source of our profits for a long time to come, but we have to admit that no economy can avoid cyclical swings," he said.

"Expanding business abroad to spread risk is a vital strategic choice for Chinese banks to maintain sustainable growth."

ICBC recently purchased 20 per cent of South Africa's Standard Bank for $5.6 billion, the largest foreign acquisition by a Chinese bank.

Mr Yang recommended that Chinese investors should focus on mergers and acquisitions rather than introducing their own branches as this was a more effective way of increasing growth.

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