Research Of Cross-border M&A Of Chinese State-owned Commercial Bank

The US sub-prime crisis which is happened in 2007 has triggered a worldwide financial turbulence and rewritten the pattern of global financial industry. The European and American banks and financial institutions has burst out the accounting crisis. The Wall Street investment model which has been a proud of America does not exist any more. The effect of this crisis is deep and profound. Until now,2009, there is still hundreds of American banks shut down because of poor management.Although the Chinese state-owned commercial banks have been suffering from many problems such as institutional criticism, since china got access to the WTO, the Chinese government has determined to reform the banking sector. The methods included government injection,asset reorganization and stock market reform. After that, the capital strength and asset position of Chinese state-owned commercial bank are refreshed. The four state-owned commercial banks have accelerated their pace of overseas expansion and they build their future strategic development goals as to be world-class banks. In this transition time, Chinese banking group encountered the most serious economic crisis and that has posed a severe test to our banking sector. however,the sub-prime mortgage crisis is an opportunities even more than a challenge for us. This crisis made European banks and United States banks cut down their asset size and weakened their capital strength, many international banking giant even published their negative profit growth, In this situation, they have to streamline operations and sell the overseas assets-especially in some emerging markets-at very low price, which will undoubtedly bring the overseas M&A opportunities for china.:on one hand, the decreasing of the scale of European banks and the united states banks lead to the devaluation of themselves and that create the opportunities to enter the European and American markets for us; on the other hand, that the leading banks now have no time to take into account of the emerging market give our bank an opportunity to improve their international competitiveness and influence by entering the emerging markets.This paper used the ROE model to analyze the HSBC's M&A cases in the last 10 years. The results showed us that the HSBC performance was improved before the sub-prime crisis happened. In one hand, this result illustrates that the cross-border M&A is benefit to HSBC's operation and growth, in other hand, it also illustrates the timing of bank merger and acquisition has a great influence on the ultimate success. The success of the HSBC Group's M&A cases is due to its own merger strength, full experience and the strategy adopted.Then this paper introduce the M&A competency model in order to analyze the current reformed Chinese state-owned commercial banks. Whether compared with other foreign banks or with other domestic joint-stock banks, Chinese state-owned commercial banks already possess certain advantages to some degree. In particular, this advantage is embodied both in intangible resources such as goodwill as well as brand and physical resources such as financial resources.Finally, this paper come up with some strategies for future cross-border M&A to Chinese state-owned commercial banks, combined with the experience and strategies of HSBC Holdings. In order to take successful overseas M&A, Chinese state-owned commercial banks should firstly choose Asian as their base, and then followed by further expansion of Europe and the United States as well as the emerging countries. The choice of the target banks should be consistent with the development strategies of Chinese state-owned commercial banks; the Chinese commercial banks should take advantage of the sub-prime crisis timing to expand to overseas market and the payment method should be flexible and diversified to low down the whole M&A risk.