The official Shanghai Securities News reports, citing sources, that the China Development Bank, one of the country’s three policy banks, is planning to invest over RMB7 billion in Shenzhen Financial Leasing, taking a 90% stake in the latter.

The capital injection will make SFL the largest financial leasing firm in China.

Shenzhen Financial Leasing currently has registered capital of RMB716 million, with Hainan Airlines Group the largest current shareholder with a 21.66% stake.

Xi’an Aircraft Industry, the parent of Xi’an Aircraft International, also owns 18.16% of Shenzhen Financial Leasing.

In October 2007, State Grid, one of China’s two state-owned power transmission firms, said it was selling its 3.21%t stake in Shenzhen Financial Leasing for a minimum of RMB16.10 million.

State Grid said in a statement to the Shanghai United Assets and Equity Exchange that Shenzhen Financial Leasing reported a 2006 net profit of RMB11 million, compared with RMB1.26 million a year earlier.

In January 2007, China’s banking regulator issued new rules permitting qualified local and overseas-incorporated commercial banks to apply to set up directly-controlled lease finance companies. Leading domestic lenders including Industrial and Commercial Bank of China , China Construction Bank and Bank of Communications all of which have since established lease financing units.

China Development Bank has reportedly won central government approval to restructure itself into a commercial bank. The bank is expected to bring in strategic investors ahead of going public.
Source: Forbes

Industrial & Commercial Bank of China has been authorized by the Qatar Financial Centre Regulatory Authority to operate a full branch from the Qatar Financial Centre.

Jiang Jianqing, Chairman of ICBC and seen in our illustration, said: ‘We are delighted to have received our license from the Qatar Financial Centre. This is the first time a Chinese bank has established operations in the Middle East.’

Stuart Pearce, CEO & Director General of Qatar Financial Centre Authority, said: ‘We are very pleased to welcome Industrial & Commercial Bank of China as a licensed firm and see their commitment to Qatar as evidence of the growing trade between China and the Middle East.’
Source: Fox Business

Chinese financial companies are buying into the American banking scene where prices are at a low ebb partially because of the sub-prime problem. Which puts US regulators somewhere between a rock and a hard place. The Fed must sign off on any transaction in which a foreign investor takes more than a 5% stake in a U.S. bank. And it must approve any applications to open branches in the US.

On the one hand, the government is supposed to be committed to unfettered cross-border deals as when American companies try to buy stakes in China.
On the other hand, Chinese banks operate in a very different regulatory environment.

It has been suggested this is why the U.S. has dragged its feet on letting Chinese banks set up U.S. branches.

Minsheng Bank has agreed to buy a 9.9% stake in San Francisco’s UCBH—marking the first such move by a Chinese bank on U.S. soil.
Industrial & Commercial Bank of China (ICBC) and China Merchants Bank have applied to the Federal Reserve to open stateside branches.
Citic Securities has taken about 6% of Bear Stearns for $1 billion.
CCB, China’s third-largest bank, bought Bank of America’s operations in Hong Kong and Macao last year.

China’s three biggest banks rank among the top 20 in the world by market value, with ICBC overtaking Citigroup and Bank of America as the largest in July.

This is not to say that buying into American banks is that great an idea. Pete Hahn, a fellow at City University’s Cass Business School in London said, ‘In the current environment, you would have to be extremely brave or extremely stupid to buy a U.S. bank.’
Source: BusinessWeek

Market prices for some top Chinese companies have achieved the status of Gucci or Louis Vuitton in relation to their global counterparts; in many cases, they are the most expensive items on the shelf for equity investors.

Garry Evans, an Asia-Pacific equity strategist at HSBC, detailed this sudden change of pricing power commanded by Chinese stocks, as ‘China Rules the World’.

Going a bit far but in financial circles let there is a lot of truth in the title.

Chinese companies can now claim the world’s largest market capitalizations in banking, insurance, telecoms and airlines. In many other industries — securities brokerages, real estate, oil, and steel — the top Chinese companies lead in global rankings.

China’s largest bank, the Industrial and Commercial Bank of China, has swiped from Citigroup the title of the world’s largest bank measured by market capitalization. ICBC, at $333 billion, is 42% larger than than Citigroup’s $235 billion, and at 29.6 times estimated price-to-earnings ratio it is more than twice as expensive than Citigroup.
At a market capitalization of $246 billion China Life, the world’s largest life insurer by market value, is worth more than any of the largest North American insurers.
In the telecoms industry, China Mobile leads the world with a $346 billion market capitalization. AT&T is 36% smaller.
In aviation, Air China, is worth more than the combined value of two far more respected Asian rivals, Singapore Airlines and Cathay Pacific.

Evans attributed these astronomical valuations to a recent rapid run-up in Chinese stocks. The Hang Seng index — the benchmark for the Hong Kong market, where all the biggest Chinese companies are available to foreign investors — is up by 42% since August’s bottoming out in the midst of the global liquidity rout.
Source: Forbes

Dow Jones Newswires report the Industrial and Commercial Bank of China, China’s biggest bank measured by assets, is in talks to acquire Seng Heng Bank, a Macau bank controlled by gambling mogul Stanley Ho.

Stanley Ho, (born November 25, 1921), is an entrepreneur in Hong Kong and Macau. Ho is sometimes nicknamed ‘The King of Gambling’, reflecting the government-granted monopoly he held of the Macau gambling industry for over 35 years.

Ho is the wealthiest person in Macau, and one of the wealthiest in Asia. According to Forbes, he tied for 104th rank among the world’s richest people in 2007. He owns many properties in both Hong Kong and Macau and has taken part in many kinds of business including entertainment, tourism, shipping, real estate, banking, and air transport.

And, as an odd aside, he once served the writer wine at dinner while wearing an eighteenth century footman’s wig. That was not his full-time job. And the wig did not suit him.

The Financial Times reports talks have been under way between the two sides for three months.

Ho owns the bank through his casino operator Sociedade de Turismo e Diversoes de Macau, which has a 12.08% stake in Hong Kong-listed conglomerate Shun Tak Holdings which acquired the bank in 1989.

Seng Heng, with assets of US$3.2 billion, is Macau’s second-largest locally incorporated bank after Tai Fung Bank.

ICBC’s Chairman Jiang Jianqing said in a Hong Kong briefing on its first-half results that the bank was open to the idea of overseas acquisitions as a means of lowering its foreign currency exposure.
Source: Shanghai Daily and research.

The People’s Bank of China issued RMB101 billion ($13 billion) worth of central bank notes to a handful of financial institutions in an effort to absorb excess liquidity from commercial banks.

The 3-year notes carry an annual interest rate of 3.69%. The notes were sold to four major State-owned commercial banks, share-holding banks and municipal commercial banks.

China Construction Bank, the Industrial and Commercial Bank of China, Bank of China and the Agricultural Bank of China bought RMB30 billion, RMB27 billion, RMB17 billion and RMB12 billion respectively. Other banks such as China Minsheng Banking and Shanghai Pudong Development Bank also took in substantial amounts.

Analysts said that due to recent poor sales of ordinary notes in open market operations, the central bank had to issue them to particular institutions to absorb excessive liquidity and prevent the economy from overheating.

Meanwhile, in further financial moves, according to the Beijing Times the Ministry of Finance will issue RMB600 billion ($78.9 billion) of special treasury bonds to the Agricultural Bank of China next week, the first batch of a planned RMB1.55 trillion sale.

The Agricultural Bank of China will then act as an intermediary channeling the bonds from the Ministry of Finance to the central bank, which in exchange will release part of its foreign exchange reserves for overseas investment.

The central bank will use them as a financial tool to absorb excessive liquidity in the domestic market.

By the end of June, China had the world’s largest foreign exchange reserves of more than $1.3 trillion. Investing the huge sum into more profitable areas is an important task for financial regulators. Analysts also believe that the issuance of the special bonds suggests a new round of foreign exchange investment is on its way.
Source: China Daily in two separate stories thus China Daily and China Daily.