Standard Chartered Plc, which makes two-thirds its profit in Asia, plans to make an acquisition in China to help it expand faster to compete for a slice of that nation's US$1.4 trillion in household savings.
The UK-based lender, which is also traded in Hong Kong, is in talks with many banks in China, said Peter Wong, Standard Chartered's Hong Kong chief executive officer.
Wong declined to give a time-table for an acquisition.
"China is too big," said Wong at a press briefing. "With that landscape and such diversity in terms of cities and wealth of the nation, we would like to have a much better way than just organic growth. It will be very difficult."
HSBC Holdings Plc, Citigroup Inc and global rivals are expanding in China, the fastest-growing among the world's 20 biggest economies, where more people are buying insurance and taking loans to purchase homes and cars.
Overseas banks will be able to lend and accept yuan deposits from domestic customers at the end of 2006, when China fulfils a pledge when it joined the World Trade Organization in December 2001.
HSBC, Europe's biggest bank by market value, last week said it is paying 14.46 billion yuan (US$1.75 billion) for a 19.9 percent stake in the Bank of Communications (
Citigroup, the world's largest financial services company, bought an 8.3 percent stake in Shanghai Pudong Development Bank Co (
Standard Chartered is in talks to buy a stake in China Everbright Bank, the nation's eighth largest lender, which is controlled by China's Cabinet, according to media reports. Wong declined to comment on that.
Standard Chartered opened its first branch in China in 1858 and now has seven branches there besides its Hong Kong offices. HSBC plans to open its tenth branch later this year.
Opening branches at the currently allowed pace of one a year would take foreign banks too long to catch up with local lenders, analysts said. Industrial & Commercial Bank of China has 25,960 branches countrywide and Agricultural Bank of China, the smallest of the big four state banks, has 50,000 outlets.
Starting in September, the one-branch-a-year rule will be relaxed to allow multiple openings in a 12-month period, the China Banking Regulatory Commission said last week.
"If you look at competition that we are facing inside China, most of the four state-owned banks have at least 15,000 branches, and have national licenses -- we don't," Wong said. "They have the customer base, we don't. To build a customer base will take a long time."
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