The Industrial and Commercial Bank of China (ICBC), the mainland's largest bank, is prepared to acquire more foreign banks, possibly this year, a senior executive said.

People queue up before an ICBC ATM machine in a shopping district in Beijing. The bank is ready to acquire more foreign banks this year. Bloomberg

"It is possible that ICBC will complete another acquisition deal in 2008," Pan Gongsheng, secretary for the ICBC's board of directors, said in an exclusive interview with China Daily.

Pan, who is also responsible for the bank's merger and acquisition business, declined to elaborate further on the plan.

ICBC will continue its global hunt in the coming years, putting priority on emerging markets.

US financial institutions, battered by the subprime mortgage crisis, may also be on ICBC's shopping list, if "such a deal would facilitate our strategic development", Pan said.

"ICBC's major strategy will be expanding in Asia, consolidating in Europe and making a breakthrough in the US," Pan said.

Citing Citibank and HSBC as examples, Pan said mergers and acquisitions have always been important for global banks to achieve internationalization.

ICBC has become keen on making such deals since its Shanghai and Hong Kong listing in October 2006.

It acquired a controlling stake in Indonesia's Halim Bank in December 2006, and Macao's Seng Heng Bank in August 2007.

In October, ICBC took an unprecedented step toward becoming the largest shareholder of Africa's largest bank, Standard Bank, by acquiring a 20 percent stake. It was Africa's biggest foreign-acquisition deal.

ICBC has also been reported to be in talks with Thailand's ACL Bank, although a deal has yet to be reached because of Thailand's cap on foreign investment in local banks.

Excluding Hong Kong and Macao, overseas operations will account for 6-7 percent of ICBC's total revenue by the end of this year, taking into account all the acquired business, Pan said.

The number will be highest among mainland banks, Pan said, putting ICBC ahead in the race of global hunting among mainland lenders trying to internationalize.

Talking about how the bank picks up potential targets, Pan said: "A strong financial position and profitability are necessary, but not essential."

Unlike asset management companies, which may focus more on financial aspects, ICBC focuses more on strategic development.

"Through acquiring banks in Macao and Africa, ICBC has become a significant platform to support the economic cooperation between the mainland and the two places," Pan said.

Organic growth

By first establishing branches in cities throughout the world, ICBC hopes to create footholds that will ease future expansions and acquisitions in those areas, Pan said.

The bank has just set up an office in Moscow and is waiting for approval to open others in Doha, Dubai, New York and Sydney.

And the Middle East, in particular, is seen as a market with increasing importance, given its closer economic connections with the mainland.

Those ties bring huge business opportunities for both Chinese and Middle East enterprises, Pan said.

"There are many construction-related companies in Dubai investing in businesses such as cements, raw materials, and petrochemicals," Pan said. "Mainland firms there need multinational banks to support their expansion in the region."

(HK Edition 01/25/2008 page2)