Tiny China Banks Lure Big Fish
The large fish tank in the banking hall of the Jinan City Commercial Bank is a Chinese good-luck symbol that is supposed to bring money swirling through the doors.
The greatest piece of fortune to come breezing into this rundown building, however, was a group of executives from the Commonwealth Bank of Australia. They came to check the books and ended up buying an 11% stake last year. Australian finance and marketing wizards have been swarming all over it ever since, drawing up no fewer than 20 business plans to give the bank a complete makeover.
While giant state-owned banks are demanding $1 billion or more to court a Western partner such as Citigroup Inc. or HSBC Holdings PLC, some of China's 100-plus city banks -- small commercial institutions designed to serve municipalities -- are eager to get hitched for a fraction of that sum. For foreigners seeking a foothold in the world's fastest-growing banking market, a deal with a smaller bank may be money better spent.
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For a start, the welcome is warm, the books may be cleaner and -- above all -- a modest outlay gets a foreign investor a big say in a bank like Jinan City. Commonwealth Bank paid about $17 million for its 11% stake, according to Jinan City's president, Guo Tao, with an option to increase the holding to 20%.
Among investors who have been bitten: HSBC bought 8% of Bank of Shanghai; Canada's Bank of Nova Scotia has 2.5% of Xian City Commercial Bank; and the International Finance Corp., the private-sector financing arm of the World Bank, has a small stake in the Xian bank, a larger one in Nanjing City Commercial Bank.
A scramble is on for top city banks still unattached. Germany's Deutsche Bank AG and ING Groep NV of the Netherlands have been in talks with the Bank of Beijing. Chinese banks report approaches from a slew of other U.S. and European institutions.
China's city banks were created in the 1990s by municipal governments from the wreckage of urban credit cooperatives, and many still rely on government patronage for business. Chinese banking regulators say a reason they are encouraging foreigners to buy into city banks is to break those cozy links.
Oversight is a key issue for investors as they tiptoe through a banking system littered with unexploded financial land mines. Just last month, a court case showed how a single customer allegedly swindled $892 million from a branch of the Industrial & Commercial Bank of China, the country's biggest bank. Some $240 million still is missing.
A billion dollars will buy a foreign investor no more than 5% of the Bank of China or China Construction Bank, two of the Big Four commercial lenders seeking overseas partners ahead of stock-market listings. That would be enough to secure a board seat, but little real control. Interest among foreign investors appears lukewarm so far.
More reasonably priced are midsize "shareholding" banks, including the Shanghai-based Bank of Communications, in which HSBC bought a 19.9% stake for $1.7 billion; and Shenzhen Development Bank, now controlled by U.S. private-equity firm Newbridge Capital, which paid $150 million for a 17.89% stake. There are 11 of these banks; perhaps four or five are still looking for partners.
City banks are the minnows, with just 5.2% of all banking assets. The Big Four have 54% of assets and shareholding banks 14.6%.
Skeptics say foreign investors may end up regretting rushed marriages with smaller banks. "In five years they'll be divesting," predicts Matt Bekier , who heads the China banking practice for McKinsey & Co. "They will be asking: 'Where is this going to lead us?' "
One challenge for foreign banks: maintaining interest in an acquisition that hardly registers a blip on their books. Commonwealth Bank is more than 80 times bigger than Jinan City in terms of assets. On the other hand, the risks are minimal too.
"It's a very low-cost option of learning in China," says Helge Weiner-Trapness, Hong Kong-based head of the Financial Institutions Group in Asia for J.P. Morgan Chase & Co.'s investment-banking unit. "It's paying for tuition."
Also, cities are the engines of China's growth, and home to growing numbers of middle-class consumers. A few are the size of small countries. Shanghai, China's largest city, has 17 million people.
By hooking up with a foreign partner, city banks hope to acquire management know-how and technology to expand farther afield. Jinan is a city of five million, but its bank aspires to expand into surrounding Shandong province, which has a population of 90 million and is one of the wealthiest areas of eastern China. To get there, Jinan City is leaning hard on Commonwealth Bank.
"They've been very demanding of us," says Richard Williamson, Commonwealth's general manager of business development. He says his bank looked through financial data on 100 city banks before settling on Jinan City, largely because it liked the management team. "We thought they had a very clear strategic vision," he says.
For Jinan's managers, "it was like falling in love," says Mr. Guo, recalling the start of the relationship with Australia's largest retail lender.
A team of 20 Australians spent a month in the Jinan bank in November, and came up with business plans that covered everything from credit cards to risk-control systems. "We didn't know how far behind we were," says Mr. Guo, who is busy upgrading his own skills by studying part-time for an MBA at a Beijing college. Jinan City aspires to become a national bank with a stock-market listing. Its soaring ambitions are reflected in a new 42-story headquarters now rising over the city, about 500 kilometers south of Beijing.
Mr. Williamson declined to go into detail on how Jinan City fits into Commonwealth Bank's broader strategy in China. Commonwealth has insurance and fund-management ventures in China, and a banking network would offer a good sales platform for these products. Banking industry executives also say that Commonwealth is pursuing Hangzhou City Commercial Bank, too.
"If you think you can put together a network it's going to be a great financial success," says Stephen Harner, a banking consultant in Shanghai.
小银行也能钓来大鱼
在济南市城市商业银行(Jinan City Commercial Bank)的业务大厅里有一只巨大的鱼缸，这在中国是一种祈求财源茂盛的标志。
不过，让该行总部大楼更能感觉到“财”气的是一群来自澳洲联邦银行(Commonwealth Bank of Australia)的银行家们。去年，他们查看了济南市城市商业银行的帐目，最后决定买下该行11%的股份。从那以后，来自澳大利亚金融和营销行业的经营们云集济南市城市商业银行，签下了不少于20份商业计划书，准备让济南市城市商业银行的东家来个彻底大换班。
国有大银行在吸引花旗集团(Citigroup Inc.)或汇丰控股(HSBC Holdings PLC)加盟时通常会要求他们出价至少10亿美元，而中国的一百多家城市商业银行则急切希望获得外资银行的“提携”，即使它们的出价只有那个数字的很小一部分。对于那些希望在中国这个全球银行业增长最迅速的市场上占得一席之地的外资银行，能以少量资金入股小银行是非常划算的生意。城市商业银行是一类专门为当地城市提供服务的银行机构。
开始时，中方的小银行对外资银行热忱以待，他们的帐目清楚，而且，更重要的是，外方只用少量费用就能在济南市城市商业银行这样的银行获得很大的发言权。比如据济南市城市商业银行行长郭涛透露，澳洲联邦银行为收购该行的11%股份只花费了1,700万美元。
这方面的例子还有：汇丰银行收购了上海银行(Bank of Shanghai) 8%的股份，加拿大的丰业银行(Bank of Nova Scotia)收购了西安商业银行(Xian City Commercial Bank) 2.5%的股份，世界银行(World Bank)下设的民间融资机构国际金融公司(International Finance Corp.)也在西安商业银行持有少量股份，另外它还持有南京商业银行(Nanjing City Commercial Bank)较大比例的股份。
外资对那些尚未染指的一流城市商业银行正在紧锣密鼓加紧行动。德国德意志银行(Deutsche Bank AG)和荷兰国际集团(ING Groep NV)都在与北京银行(Bank of Beijing)谈判。中国多家银行还透露，一批美国和欧洲金融机构正在与它们接触。
城市商业银行系统是上世纪九十年代从中国各地的城市信用合作社改制而来的，许多城市商业银行在业务上仍依赖政府的保护和支持。中国银行业监管部门说，之所以鼓励外资银行收购城市商业银行，很大一部分原因是要掐断这种依赖关系。
在投资界心存期待而又小心翼翼地考察暗藏危机的城市银行系统的时候，对他们来说，银行本身的失察是他们担心的一个关键问题。就在上个月，媒体报导了一桩银行官司：中国工商银行(Industrial & Commercial Bank of China)一支行的一家客户被控诈骗了8.92亿美元，目前仍有大约2.4亿美元没有下落。
外资用10亿美元只能买到中国银行(Bank of China)或中国建设银行(China Construction Bank)不到5%的股份。中国四大商业银行中的这两家银行为赴海外上市都在寻找海外股东。这个持股比例虽然足以在董事会获得一席之地，但难以获得实际控制权。到目前为止，海外投资者对中国银行和中国建设银行的报价反应并不积极。
而中等股份制银行的报价相比之下就合理多了。比如，汇丰去年斥资17亿美元，从总部位于上海的交通银行(Bank of Communications) 购得19.9%的股份。深圳发展银行(Shenzhen Development Bank)目前被美国股权投资公司新桥资本(Newbridge Capital)控股，新桥资本以1.5亿美元购得了该行17.89%的股份。中国与交通银行情况类似的银行有11家，其中有4、5家仍在寻找合作伙伴。
城市银行在中国整个银行体系中只算得上“小鱼”，它们的资产额在银行业资产总额中只占5.2%，而四大国有商业银行占54%，股份制银行占14.6%。
对银行业的这种中外联姻持怀疑态度的人认为，外资银行与小银行这样仓促“成婚”会让他们后悔莫及。麦肯锡公司(McKinsey & Co.)中国银行事务部主管麦特?贝基尔(Matt Bekier)说，5年后他们会闹分家的，到时候他们会反思：这样下去怎么行？
外资银行面临的一个挑战是：如何对一家在帐面上几乎反应不出来的收购对象产生兴趣。以资产规模而论，澳洲联邦银行比它参股的济南市城市商业银行大80多倍。不过从另一方面来说，相应的风险也很小。
摩根大通(J.P. Morgan Chase & Co.)投资银行部旗下Financial Institutions Group驻香港负责人魏纳?特拉普内斯(Helge Weiner-Trapness)说，在中国作尝试的成本很低，付出的学费会物有所值。
另外，城市地区是中国经济发展的主要推动者，城市里日益扩大的中产阶层是推动消费增长的生力军。中国有些城市规模之大甚至超过某些小国家，比如中国最大的城市上海人口有1,700万之众。
各家城市银行希望，与外资银行合作能让它们扩大业务范围，获得更先进的管理经验和技巧。济南市有500万人口，而其所在的山东省是中国东部最富裕的省份之一，总人口有9,000万，济南市城市商业银行希望能将业务拓展到省内周边地区。为达到这一目标，济南市城市商业银行非常需要澳洲联邦银行的帮助。
澳洲联邦银行业务发展部总经理理查德?威廉姆森(Richard Williamson)说：济南市城市商业银行对我们期许很高。他说，他们在决定参股济南市城市商业银行之前考察了中国100多家城市银行的财务情况，最终选定济南市城市商业银行是看中了该行的管理团队。他说：我们认为，济南市城市商业银行的管理层有明确的战略规划。
而对济南市城市商业银行的领导层来说，与这家澳洲最大的零售银行结盟的过程“就像是一场恋爱”，行长郭涛回忆起双方开始接触的情形用了这样的表述。
去年11月份，澳洲联邦银行派出了20人组成的小组在济南市城市商业银行考察了一个月后，提出了一份涵盖从信用卡业务到风险管理等几乎所有问题的业务发展计划书。郭涛回忆说：见到计划书之前，我们原来真不知道我们有多落后。意识到差距后的郭行长为提高管理水平，平时还抽出时间到北京大学学习工商管理课程。济南市城市商业银行的远期目标是成为一家全国性银行，并争取上市。该行新建的42层高的总部大楼似乎也反映了他们的雄心壮志。
威廉姆森不愿透露为何选择济南市城市商业银行作为他们在华发展战略蓝图上的一枚棋子。澳洲联邦银行已与中国公司联合组建保险及基金管理公司，如能构建一个银行网络将有助于保险和基金产品的销售。银行业人士还透露，该行正在争取参股杭州商业银行(Hangzhou City Commercial Bank)。
在上海从事银行业咨询业务的史蒂芬?哈纳(Stephen Harner)说，如果能建成业务网络，那对金融企业来说是一个巨大的成功。
