China: Forward march

Mar 1, 2013

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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