Comments on: China might keep the weakest bank all to itself Now raising intellectual capital Sun, 08 Nov 2015 08:31:30 +0000 hourly 1 By: Neil Hardie Wed, 30 Sep 2009 11:17:28 +0000 I think there is another factor in play here. When China wooed foreign investors into its other state owned banks it limited investment to 19.9% of equity but still expected the foreign partners to show it how to extend lines of credit to rural areas to facilitate more balanced development in accordance with China’s 11th 5yr plan.

That didn’t happen probably because the foreign partners discovered after signing commitments that basic market information needed to develop suitable products and generate profits from the rural areas simply doesn’t exist and the cost and hassle involved in collecting it would be astronomical. Instead the foreign investors pushed China’s banks towards wealth managment services for the rich in 1st tier cities where they could make easier short term profits.

The Chinese government are disillousioned with the results of foreign investment in Chinese banks and typically can’t lose face by admititng that part of the problem lay with them. So they retaliate by shutting out foreign partners from the Agricultural Bank.

In the long run it doesn’t matter very much because there are several regional players in China who want to go national such as Shanghai Pudong Development Bank (recently renamed SPD) and China Merchant’s Bank. These are far less hemmed in by government restrictions and have a far more customer focused approach than the traditional big four and in my view will provide far better opportunities for foreign investment in due course.

By: ANON Wed, 30 Sep 2009 09:17:27 +0000 The Agricultural Bank of China must be quite a big deal, seeing that staple foods are imported from the US. Where does HSBC fit in ?