Equity Pricing In Foreign Acquisitions Of The Chinese Banks

Because of the fast development of China's banking industry and the deepening of the opening-up process, foreign investors step in China's banking market in succession. With the strategy of development and investment in China, these foreign investors set up their subsidiaries or branches and start all kinds of operations in steps in one hand. And in the other hand, they energetically probe such a way to rapidly penetrate into China's banking industry as equity acquisition of the Chinese banks. In the mean time, in spite of its progress in many aspects, Chinese commercial banks have still been in difficulties, which force them to reform the present management by opening-up to foreign acquisitions. On account of all these, based on the mutual benefit, the foreign investors and the Chinese banks naturally start the cooperation through acquiring equity to realize their strategic goals. However, because of some existed problems, there are some idiographic troubles and obstacles. Among these, the discrepancy in the equity pricing by both parties constitutes the key problem, which is also the core barrier for the final deal.So, based on the analysis of the motivation for the transnational M&A, combined with all kinds of specific situation of foreign financial institute in China, this paper ultimately owe all kinds of benefit the foreign investors could get through acquiring Chinese bank's equity to some different "interest points", meanwhile, dothe same analysis and summary for Chinese bank which could get benefits through selling equity. This paper comes to the point that, these interest points not only account for both sides' action, but also consist the fundamental factors affecting the price-modification in transaction, and are the basis of the pricing. Linking some factual cases of share acquiring, this paper divides the total transactional price into net capital price and over-price. Then this paper separately analyzes the reason for bringing on these discrepancies of the two prices, and emphasizes on the analyzing the foreign investor' interest points with the aforementioned viewpoint. In this way, this paper researches the pricing procedure and the acceptation degree of the foreign investors by deconstructing the relative interest points in intangible assets. Then through analyzing the different and problem in Chinese banks offering the over-price, this paper finds the some reasons for the discrepancy between foreign investors and Chinese banks when evaluating and pricing the equity. Based on all these researches and analyses, connected the present problem in Chinese banks, this paper finally throws a little light on the equity-acquiring issue and the everyday operation of Chinese banks.