ICBC Sets Up Shop in India

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Sept. 20 – China’s most valuable bank – Industrial and Commercial Bank of China (ICBC) – has become the first Chinese bank to establish itself in India. The bank is planning to start with an investment of US$100 million and aims to lend to corporations and cover sectors where Chinese companies have a presence such as power, telecom and infrastructure. The bank has set up an office in the Bandra-Kurla business district in central Mumbai and has appointed Sun Xiang as CEO for India.

With a market capitalization of US$234 billion, ICBC is the world’s largest bank. Its m-cap is more than nine times that of India’s largest bank, the State Bank of India (US$25 billion). Also, being the largest in m-cap, ICBC is the world’s biggest in terms of profits and customer deposits. This decision comes after a year when the State Bank of India was allowed to deal in yuan through its branch in China.

According to ICBC president, trade between the two countries amounted to around US$60 billion which was a 40 percent growth year-on-year. Also, India and China have not been specially affected by the international financial crisis. ICBC would initially look at wholesale banking business and later move into personal and private banking.

Although ICBC has been expanding its international business – which has grown to US$14 billion – it was still only 4 percent of the total assets of the bank. The bank aimed at increasing the share of international business to 10 percent.

ICBC’s presence in India is also likely to give a boost to China’s move to use the yuan in international trade. Recently, China has entered into currency swap agreements with a number of countries. The Chinese central bank has also permitted lenders to engage in cross-border settlement in Chinese currency.

According to a statement issued by ICBC, the Mumbai branch will develop partnerships with Chinese enterprises in India, support local telecommunication, transportation, power and other infrastructure construction. ICBC will extend financial services to heavy machinery, automobile and other industries as well.