CDB aims for German expansion
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China Development Bank (CDB), the large State-owned lender, is among the four final bidders for a buyout of Germany's troubled WestLB AG bank, the Wall Street Journal reported over the weekend, citing an unnamed source.
Under the direct supervision of the State Council, China Development Bank, together with US-based leveraged buyout firms Blackstone Group LP, Apollo Global Management LP and J.C. Flowers & Co, has entered the final round of potential bidders, according to the report.
The four finalists are required to submit offers no later than February 11, in a bidding process set to hit the 10 billion euros ($13.61 billion) mark, the journal said.
Walter Hillebrand-Droste, a spokesman for WestLB, told the Global Times Sunday that the bank could not confirm the report. A fax sent to China Development Bank for details went unanswered Sunday.
The lender, "which has done some preliminary due diligence on the lender, may proceed cautiously and seek a minority stake or a corporate tie-up," Reuters also reported over the weekend, quoting unnamed sources.
This is not the first time China Development Bank has shown its interest in overseas expansion, as it failed in a bid for Allianz SE's Dresdner Bank in 2008.
Even though there may be little hope of victory for China Development Bank, it indicates growing confidence and interest in the Chinese financial sector to seek opportunities abroad, analysts said.
"There is a need for Chinese banks and financial institutions' growing presence globally, as Chinese enterprises that have been more active in overseas expansion in recent years are in need of financial services from home agencies," said Lu Zhengwei, a senior economist at Industrial Bank Co in Shang-hai.
Industrial and Commercial Bank of China (ICBC), one of the big four State-owned com-mercial lenders and the world's largest bank by market value, is the most active Chinese bank expanding overseas. The bank announced January 23 that it had inked a pact to acquire an 80 percent stake in Bank of East Asia's US operations for $140 million, with Bank of East Asia holding the rest.
In January, ICBC opened a number of branches in European cities, including Paris, Brussels, Amsterdam, Milan and Madrid, following an existing presence in London, Moscow, Frankfurt and Luxembourg.
Currently, Chinese banks' overseas operations rarely include providing financial services for local residents. "It would be easier to enter local markets by acquiring stakes in local banks," Lu told the Global Times.
Lu added that the expansion may face risks when entering different cultures, and unfamiliar legal and regulatory frames in foreign markets.
"Chinese banks' accelerated expansion moves may also stir Western political concerns. Measures may be taken to deter any big deals, which may harm Western interests," he said.
