ICBC (Asia), the sixth largest listed bank in Hong Kong in terms of assets, said yesterday it would acquire a couple of Hong Kong peers in the next one or two years. Analysts consider this expansion plan inevitable but arduous.

Nearly 60 per cent-owned by China's biggest lender Industrial and Commercial Bank of China (ICBC), ICBC (Asia) attributed a great dedication to Belgian Bank it purchased in 1994, and takes merger and acquisition a key to success in increasing assets and network.

"The year 2005 was a milestone in our retail banking development. We successfully integrated with Belgian Bank on October 10, which contributed to our massive growth of retail banking business bases and a double growth of our branch network," said ICBC (Asia)'s chief executive officer Zhu Qi at a press conference yesterday.

"It is proved that merger and acquisition are very effective method to fuel our growth," Zhu said.

"We plan to make another merger in Hong Kong in the coming one or two years, if there is a good chance," he said.

The Hong Kong-based ICBC (Asia)'s latest merger was made last August. It acquired Chinese Mercantile Bank (CMB) in Shenzhen, in a bid to expand its business catalogs to mainland-related business.

ICBC (Asia) said in a statement that it has strengthened the company structure of CMB and upgraded the company policy and operating system.

"At present, we are applying the RMB business licence to further develop our mainland business. CMB will focus to enhance business development, especially on the business potential between Hong Kong and the mainland in order to expand the source of revenue," added Zhu.

Analysts, however, said that the acquisition plans sounded feasible but "could be difficult".

"It's hard to predict which bank is going to be ICBC (Asia)'s next prey, but the move (acquisition of other banks) can be difficult and it needs high price," said Patrick Pong, a bank analyst from South China Research Ltd.

There are only a few small and medium scale banks in Hong Kong that might be considered for purchase by bigger lenders, and those banks, such as Liu Chong Hing Bank and Wing Lung Bank. But they are mostly family-run banking businesses by several generations, so it is still a question whether they will sell off their paternal property, Pong told China Daily.

Despite unforeseeable difficulties ahead, ICBC (Asia) remains optimistic about the growth in the coming years, and is inspired by the "satisfactory" result of 2005.

The lender posted yesterday a 29 per cent jump in net profit last year to HK$981 million, increased by HK$220 million over 2004.

The bank official said in its announcement that the bank's satisfactory results were because of the joint efforts and proactive culture among the staff and management and the growing demand for loan financing which created a favorable market environment for banking business.

(HK Edition 03/22/2006 page3)