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China Merchants Bank to open in Taipei and London

China Merchants Bank Co (招商銀行), the biggest bank in southern China, plans to open representative offices in London and Taipei as it speeds up expansion overseas to catch up with bigger rivals.

The Shenzhen-based bank will start preparation work this year, China Merchants said in a statement to the Shanghai stock exchange yesterday. It also agreed to acquire a 60.5 percent stake in Tibet Trust & Investment Co, it said, without elaborating.

China Merchants president Ma Weihua (馬蔚華), 60, who pioneered the nation’s first credit card and helped quintuple the lender’s earnings over the past four years, is trying to offset slowing domestic economic and loan growth by diversifying into other financial sectors including insurance, and by making acquisitions.

The bank agreed on June 2 to buy 53.1 percent of Wing Lung Bank Ltd (永隆銀行) for HK$19.3 billion (US$2.5 billion) in its first overseas acquisition. It is required to make a general offer for the rest of the lender, valuing it at US$4.66 billion.

China Merchants posted a 116 percent jump in first-half profit to 13.25 billion yuan (US$1.9 billion) as it improved loan margins and maintained fees from credit cards, withstanding government attempts to cool lending growth, it said in a separate statement on Monday.

Net interest margin, a measure of lending profitability, widened to 3.66 percent in the first half from 3.11 percent in the full-year last year. Its non-performing loan ratio dropped 29 basis points from the end of last year to 1.25 percent as of June 30. A basis point is 0.01 percentage point.

China Merchants issued 3.14 million credit cards in the first six months, taking the total to 23.82 million and boosting its bank card fees by 65 percent to 1.28 billion yuan.

As of June 30, China Merchants held US$180 million in debt issued by Fannie Mae and Freddie Mac and recorded an unrealized gain of US$1.56 million.

The Chinese bank also owned US$75 million in mortgage-backed securities guaranteed by the two beleaguered US home loan mortgage companies.
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