China's largest bank setting its sights on the Philippines

MANILA, Philippines - The largest bank of the world’s fastest growing economy is looking at the possibility of acquiring a Philippine lender, Filipino monetary officials announced on Wednesday. Bangko Sentral ng Pilipinas (BSP) Deputy Governor Nestor Espenilla Jr. said Beijing-based Industrial and Commercial Bank of China (ICBC) has made inquiries about Philippine banking legislation, rules covering the establishment of bank branches, and taxation laws. “It’s all exploratory at this point but they are open to the idea of establishing a presence in the Philippines," Espenilla said. “Mostly they want to know about what our banking rules look like and also taxation." However, Espenilla said nothing definite was being discussed and no specific bank was mentioned during ICBC’s exploratory talks with the BSP. ICBC, however, would have to acquire an existing bank to be able to operate in the Philippines since foreign banks were required to partner with local investors. Earlier, Gao Xiangyang, ICBC’s head of global and acquisition team and Wang Wendin, deputy general manager, have already met with finance officials earlier to discuss taxation issues. Founded in 1984, ICBC has been heavily involved in industrial and commercial credits and savings businesses originally transacted by the People's Bank of China. ICBC, one of the world’s top ten biggest lenders, successfully listed in both cities of Shanghai and Hong Kong simultaneously in 2006. Now the biggest commercial bank in China, ICBC also provides diversified, professional financial services to corporate and personal customers. In 2007, ICBC's trading finance from domestic branches reached $32 billion, an increase of 132.9 percent. Foreign banks in the country have been performing significantly better, sustaining record-high profits in 2006 from trading government securities amid declining interest rates and from high-margin but low-risk consumer lending. The latest available report submitted by the BSP to Congress revealed that foreign banks yielded a net income after tax (NIAT) of P12 billion, up 37.7 percent from P8.7 billion in 2005. The BSP detailed this in the Annual Report on the Implementation of Republic Act No. 7721, a law liberalizing the entry of foreign banking operations in the Philippines. In the report, BSP said that strong trading gains allowed banks to rake in profits as well as resume lending activities. The BSP said the general decline in interest rates on debt securities and the substantial foreign exchange transactions translated to huge trading income which soared by 180.6 percent and propelled the industry's non-interest income by 48.3 percent. Fee-based income of foreign banks grew by 12.2 percent and contributed almost P1 billion to their non-interest income. - GMANews.TV