Banco Popular has teamed up with ICBC, China's largest state-controlled
bank, to help finance the investments of small Spanish businesses in

There are around 300 Spanish businesses in China and most are SMEs which face big problems obtaining yuan-denominated financing.

The deal with Banco Popular will allow SMEs who are clients of Banco
Popular to obtain financing in China through ICBC's extensive network
of more than 18,000 branches.

Banco Popular, which has been in China since 1996, already has a
similar accord with Bank of East Asia, but the latter only has 20

By teaming up with ICBC, Spain's latter-day conquistadores will be able to find financing in even the remotest corners of the Middle Kingdom.

Banco Popular also hopes the relationship can be made to work in
reverse. It wants to encourage Chinese people living in Spain to use
Banco Popular to transfer funds to China rather than, as is usually the
case, using money wire services.

It will be interesting to see
whether this deal leads to bigger things. On paper, the two banks
couldn't be more different. ICBC, whose IPO last week
broke all records, is the fifth largest bank in the world but until
recently it had a huge problem with non-performing loans and customer
service is not one of its strong points

Banco Popular is a much smaller entity, the third largest in Spain,
but it has built an unrivalled reputation for efficiency and quality.
It spurns lavish marketing and advertising to focus on tailor-made
solutions for its clients, many of which are SMEs.

The Spanish bank, mindful of the less-than-stellar reputation that
ICBC enjoys in China, spent a year trying out the services of ICBC to
make sure they were up to scratch, accordig to a report in Spanish daily Expansión ($),

While modest in scope and ambition, this deal shows that there are
opportunities to be had in China for the west's medium-sized banks.

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