Research On The Equity Pricing In Foreign Acquisitions Of The Chinese Banks

As the fast development of China's financial industry reform, the pace of China's commercial banks reform is also increasingly accelerate. Foreign acquisitions in the china's banks have become the most eye-catching events of the reform of china's financial industry. Equity pricing in the M&A has been the focus of public debate. Starting from the current situation of foreign acquisitions of china's banks, combining with the all kinds of specific motivations of foreign financial institution in China, this paper analyzes the interest of foreign institution and Chinese banks and then summaries all kinds of benefits that the foreign investor could get through acquiring Chinese bank's equity to some different "interest points", meanwhile, does the same analysis and summary for Chinese banks 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 consists the fundamental factors, which affecting the price-modification in transaction. They are the basis of the pricing. And then based on the theory of equity pricing both in the domestic and international, according to some cases of foreign acquisition of Chinese banks, using the market/net asset model, this paper divides the total transaction price into the net asset value and the premium, then separately analyzes the reasons for bringing on these discrepancies of the two prices, and emphasizes on the analyzing the foreign investor' interest point 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 differences and problems in Chinese banks offering the over-price, this paper finds some reasons for the discrepancy between foreign investors and Chinese banks when evaluating and pricing the equity. This paper finally gives some policy recommendations for the financial reform.