China: Forward march
After years of tentative steps, China’s banks are poised to expand aggressively in Latin America
By Elliot Wilson In November 2007, Industrial and Commercial Bank of China dropped a bombshell. Its first large, long distance acquisition was for a fifth of South Africa-based Standard Bank, for $5.6 billion. Until then, Beijing’s largest lender by market cap and revenues had only made a few small purchases near China’s borders. Some analysts said the deal was a game-changer – others, a risk too far.
Neither ICBC nor Standard Bank has ever given details of revenues or profits from the deal. But for both sides, the deal is seen as a blinding success: ICBC gained access to economically resurgent sub-Saharan Africa. Standard Bank in turn has leveraged its relationship with ICBC as well as Beijing’s leading policy lender, China Development Bank.
But the deal’s unexpected success raised a question: why has it taken so long for Chinese banks to enter Latin America, that other vast,...
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