ICBC, the world’s largest bank by market value, is out to win the hearts — and pocketbooks — of Spanish investors.
The Chinese commercial bank opened a retail branch in downtown Madrid earlier this year. While several Chinese banks have offices scattered around the world, they usually act as representative offices or cater solely to Chinese expats.
But ICBC has gone a stage further in Spain and is now competing head to head with domestic players for deposit accounts, which are hugely popular with Spain’s army of risk-averse private investors.
ICBC is competing in the heartland of Spanish retail banking with a fixed-term deposit that pays 3.2% for euro sums above €500. That’s a highly competitive rate and beats Spain’s own banks, which either require larger sums or longer time periods to get similar rates.
I don’t think Spain’s domestic banks will be losing too much sleep over the move as ICBC’s move into retail banking is decidely low-key.
Even if it wanted to expand aggressively in the deposit market, ICBC lacks the sophisticated marketing acumen of Spain’s own banks, which for decades have sought to woo deposits with “free” gifts of saucepans, vacations or luggage sets.
Nevertheless, the move is significant as it shows how Chinese banks are gingerly starting to expand into international retail banking markets.
In another sign of its growing ambitions in Europe, ICBC has set up a bank in Poland – the first Chinese bank to get approval to operate in eastern European country.
ICBC has also been in the news recently because Temasek, the Singapore state investment firm bought a tranche of ICBC’s HK-registered shares from Goldman Sachs — a sign perhaps of Temasek’s long-term faith in China’s banking sector.
Goldman Sachs originally had a 4.9% stake in ICBC before the Chinese bank had its IPO — see this EngagingChina story. The US firm now owns a 2% stake in ICBC worth US$3bn.
At the end of 2011, ICBC had a branch network of 239 licensed overseas subsidiaries in 33 countries and regions.
More (in Spanish) on ICBC’s moves in Spain in this Expansión story.