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CCB not tempted to look at buying overseas

(Agencies)
Updated: 2009-02-11 15:08

China Construction Bank (CCB) is not interested right now in using its plump capital cushion to make foreign acquisitions, bank Chairman Guo Shuqing said in an interview published on Wednesday.

Guo said there were still too many questions about the asset quality of overseas banks for CCB to consider investing abroad.

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"Quite a lot of things interest me, but not now, not to buy because of the uncertainty," Guo told The Asian Banker.

"There is a lot of bad debt, bad assets coming on the books. So we are not so keen to do that at the moment. We are mainly a domestic-concentrated bank. We have a very big market here. We have big potential for growth in China," he said.

Guo said CCB, China's second-largest lender by assets, was still discussing with officials how it can help to finance China's 4 trillion yuan ($586 billion) stimulus plan.

He said the State-owned bank would be a "significant" partner in the plan but would decide itself which projects to finance.

"In this area, we are quite independent still. I want to stress that. It's just selecting projects we are comfortable with," Guo said.

He said CCB, which has a capital adequacy ratio of about 12 percent, was a very cautious bank。 "We do things very prudentially. We don't want the leverage to be very high, he said.

Guo said he expected the profitability of Chinese banks would deteriorate this year even though loan growth would be close to the 2008 pace.

"As you know, the central bank lowered the interest rate and there is a narrower margin. This affects profits," he said.

Guo said CCB had suffered somewhat from the global financial crisis because of its foreign-exchange exposure.

He did not go into detail but said CCB had made portfolio investments in the United States and Europe with the $22.5 billion in capital it received from the government in 2004 and the $9 billion raised in its 2005 IPO in Hong Kong.

Guo hailed CCB's cooperation with Bank of America (BoA), which owns about 16.6 percent of the Chinese lender.

The two banks have launched more than 100 projects in the past three years and CCB has overhauled most of its branches with BoA's help, resulting in increased product sales and shorter waiting times, Guo said.