Industrial and Commercial Bank of China Ltd (ICBC, 中國工商銀行), the world’s largest by market value, is branching into the -broker-dealer business in the US as it moves to expand overseas, a report said yesterday.
ICBC paid US$1 to take over the Prime Dealer Services unit of Fortis Securities, which is controlled by France’s BNP Paribas SA, the Wall Street Journal reported, citing unnamed sources familiar with the deal.
The report said the deal makes ICBC the first Chinese bank to buy a foreign broker-dealer.
The Fortis operation only has 75 existing customers, but could be a stepping stone for ICBC’s expansion into the underwriting of securities in the US market, the sources told the newspaper.
“It’s a unique opportunity and a good entry point for ICBC,” the former chief executive of Fortis Securities and chief executive officer of the new entity, Joseph Spillane, told the paper in an interview in New York.
Spillane predicted the new ICBC Financial Services, which will provide clearing and financing services to clients, would bring in about US$15 million in annual profits for ICBC.
He declined to comment on the financial terms of the deal.
The newspaper noted that the deal would allow ICBC to avoid US regulatory restrictions on foreign purchases of deposit-taking institutions.
ICBC’s profit rose nearly 27 percent in the third quarter to 42.6 billion yuan (US$6.38 billion dollars), according to a statement filed last week with the Shanghai Stock Exchange.
Last week, the bank announced it would take a 60 percent stake in Axa-Minmetals Assurance, the Chinese insurance unit of French insurer Axa SA.
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