Flurry of China bank deals hints at renewed confidence

17-Dec-2014

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An eternal optimist, Liu-Yue built two social enterprises to help make the world a better place. Liu-Yue co-founded Oxstones Investment Club a searchable content platform and business tools for knowledge sharing and financial education. Oxstones.com also provides investors with direct access to U.S. commercial real estate opportunities and other alternative investments. In addition, Liu-Yue also co-founded Cute Brands a cause-oriented character brand management and brand licensing company that creates social awareness on global issues and societal challenges through character creations. Prior to his entrepreneurial endeavors, Liu-Yue worked as an Executive Associate at M&T Bank in the Structured Real Estate Finance Group where he worked with senior management on multiple bank-wide risk management projects. He also had a dual role as a commercial banker advising UHNWIs and family offices on investments, credit, and banking needs while focused on residential CRE, infrastructure development, and affordable housing projects. Prior to M&T, he held a number of positions in Latin American equities and bonds investment groups at SBC Warburg Dillon Read (Swiss Bank), OFFITBANK (the wealth management division of Wachovia Bank), and in small cap equities at Steinberg Priest Capital Management (family office). Liu-Yue has an MBA specializing in investment management and strategy from Georgetown University and a Bachelor of Science in Finance and Marketing from Stern School of Business at NYU. He also completed graduate studies in international management at the University of Oxford, Trinity College.







By Jennifer Hughes, FT,

China’s banks and insurers have more actively sought overseas assets in 2014 than at any time in the past decade, hinting at a new found confidence to look abroad among the country’s financial institutions.

Last week’s €379m purchase of Banco Espirito Santo’s investment bank by Haitong Securities took the 2014 deal tally to 30 and the sector’s combined spend to $4.8bn, according to Dealogic. While that remains just shy of 2013’s $5.1bn, itself the biggest year since the financial crisis, the number of deals has nearly doubled.

Alongside Haitong’s recent deal, notable bank transactions have included ICBC’s $765m purchase of a majority stake in Standard Bank’s London trading business, while China Construction Bank’s $730m purchase of a 72 per cent stake in Brazil’s BicBanco received regulatory approval.

“What we’ve seen this year is some opportunistic seeking of footholds in new markets, beyond the traditional ‘comfort zone’ markets for investment such as North America, Europe and Australia,” said Colin Banfield, head of Asia M&A at Citigroup. “Brazil for one is clearly an emerging market where valuations have come down to more attractive levels during 2014.”

Individual deals are still dwarfed by financial crisis-era transactions, such as China’s purchase of a $5.6bn near 10 per cent stake in Morgan Stanley through its sovereign wealth fund in 2007 — the biggest Chinese outbound deal in the industry. But the smaller, more frequent deals highlight a growing dealmaking trend within Chinese institutions.

“They are not now taking down generally more than they can chew,” said Keith Pogson, head of the Asia financial services practice for EY. “If it is something larger, then they are typically taking a smaller stake, then sitting there long enough to understand it better.

“Banks are going in, bit by bit, and saying: ‘OK, we know there are things such as culture and management we need to understand, and if we go in there too strong, we could end up destroying value’,” added Mr Pogson.

China’s developing trade corridors have also become a focus for investment — helped by western banks’ decisions to pull back from some countries.

“Those exits have left room for Chinese banks and others to come in,” said Chris Harvey, global head of Deloitte’s financial services team. “In trade financing it pays to get on both ends of a transaction, but you can’t do that unless you’ve got a presence in the receiving country, too.”

Portugal has been the biggest beneficiary of China’s spending this year. Dwarfing Haitong’s deal was Fosun’s $1.5bn purchase of the country’s largest insurance company, Caixa Seguros — one of a series of European transactions by Fosun, China’s largest privately-held conglomerate.

 


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