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Overseas banks predict shrinking market in China
By Zhang Fengming |
July 15, 2009, Wednesday
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Online Edition
Online Edition
OVERSEAS banks are expecting a shrinking market in China this year caused by the rapid credit growth of domestic rivals and the impact of the global financial fallout, a survey said today.
Unlike previous optimistic predictions, about 25 percent of the respondents said they expected a drop of market share this year, PricewaterhouseCoopers said today in a survey of senior management of 41 overseas banks in China. In a 2008 survey, no respondents said they expected a market share drop.
This year's survey of overseas banks in China was conducted in April and May, covering the majority of overseas banks in China. The accounting firm has made the yearly survey since 2005.
The global financial crisis has slowed down overseas banks' expansion in networks and workforces in the mainland.
"Overseas banks are slowing down their business in China due to the financial fallout," said Jimmy Leung, finance service leader for PwC Central China. "However, the long-term picture is still rosy."
This year, about half of the respondents said they expected there would be fewer than 40 overseas banks to have local incorporation in China. In 2008, about two-thirds of the respondents said they expected the figure to be more than 40.
Overseas banks said they were finding competition with domestic banks more difficult against the backdrop of the rapid new yuan credit growth, the survey said.
Banks in China have extended combined new yuan credit worth 7.37 trillion yuan (US$1.08 trillion) in the first half of this year, up 4.92 trillion yuan on a year ago.
The majority of the new yuan credit is generated by domestic banks which are following the central government's call to support economic growth.
More respondents said they had no merger and acquisition plans in China in this year's survey. About 40 percent said they had no acquisition plans this year while a year ago fewer than 25 percent said they had no M&A plans.
Unlike previous optimistic predictions, about 25 percent of the respondents said they expected a drop of market share this year, PricewaterhouseCoopers said today in a survey of senior management of 41 overseas banks in China. In a 2008 survey, no respondents said they expected a market share drop.
This year's survey of overseas banks in China was conducted in April and May, covering the majority of overseas banks in China. The accounting firm has made the yearly survey since 2005.
The global financial crisis has slowed down overseas banks' expansion in networks and workforces in the mainland.
"Overseas banks are slowing down their business in China due to the financial fallout," said Jimmy Leung, finance service leader for PwC Central China. "However, the long-term picture is still rosy."
This year, about half of the respondents said they expected there would be fewer than 40 overseas banks to have local incorporation in China. In 2008, about two-thirds of the respondents said they expected the figure to be more than 40.
Overseas banks said they were finding competition with domestic banks more difficult against the backdrop of the rapid new yuan credit growth, the survey said.
Banks in China have extended combined new yuan credit worth 7.37 trillion yuan (US$1.08 trillion) in the first half of this year, up 4.92 trillion yuan on a year ago.
The majority of the new yuan credit is generated by domestic banks which are following the central government's call to support economic growth.
More respondents said they had no merger and acquisition plans in China in this year's survey. About 40 percent said they had no acquisition plans this year while a year ago fewer than 25 percent said they had no M&A plans.
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