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September 16, 2009

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Financial crisis may slow bank expansion

THE global financial crisis won't thwart the long-term ambitions of Chinese banks wanting to go global, but it may make lenders think twice about timing and strategy before they make any commitments abroad, an industry survey said.

"Most bankers said they will push ahead with globalization to achieve growth," said a statement from PricewaterhouseCoopers and the China Banking Association, which conducted the survey.

"Banks are also following their corporate clients when more and more Chinese companies are investing outbound," it said.

The survey of 813 senior bankers in China, conducted in April and July, is the first of its kind surveying the impact of the global financial crisis.

Bankers who prefer organic growth, such as the Bank of Communications and China Merchants Bank, are setting up offices overseas.

But domestic banks are more wary about foreign mergers and acquisitions even though the valuations of many overseas lenders have dropped significantly.

About 46 percent of respondents said the losses of their overseas counterparts are hard to measure, while 40 percent said they think the global financial market has yet to hit bottom.

Only 8 percent of respondents said now is a good time to make investments abroad.

"The financial crisis gives banks in emerging markets such as China a lot more options when considering mergers and acquisitions," said Albert Chan, a senior executive of Accenture China. "Regional expansion can be a good option."

The key point for them is developing management strategy following an overseas acquisition, he said.

In the PwC survey, respondents cited insufficient knowledge of overseas markets as a concern.


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