China Merchants Bank, the nation's seventh-largest lender, has no plans to acquire overseas financial institutions, its chairman said yesterday.
'Our bank will not make any further acquisitions in the overseas banking sector as we now have to focus on how to make the best out of the Wing Lung Bank deal,' said Qin Xiao on the sidelines of the Chinese People's Political Consultative Conference.
Merchants Bank was the latest mainland lender to acquire an overseas bank, seeking to expand services into the wealth management sector. In June last year, the Shenzhen lender took a 53.12 per cent stake in Hong Kong's Wing Lung Bank at HK$156.50 per share, or 2.91 times the book value in 2007.
'It's not just a matter of cash flow,' said Mr Qin about the bank's decision not to pursue acquisitions. 'To ensure the eventual success of the merger, we need to devote a lot of human resources, which limits our ability [to buy additional foreign assets].'
Mainland financial institutions have been cautious about overseas acquisitions recently. Yang Chao, the chairman of China Life Insurance, said the insurer gave up bidding for the Asian unit of American International Group because 'changes have taken place in the unit's asset quality, business and brand'.
After years of robust growth, mainland financial institutions had been aggressive in acquiring overseas counterparts before the financial crisis deepened in the second half of last year, causing their partners huge losses.
