The State-controlled Banks To Participate In Overseas M & A Retrospective And Strategic Choice

With the development of the world economy and financial integration, taking the road ofmultinational operation is the developing Chinese state-holding banks inevitable choice.To achieve rapid expansion, overseas acquisition is the top choice for multinationaloperations. At present, the international financial crisis sweeping the world, which tosome extent a challenge and an opportunity for the state-holding banks has provided ahistorical opportunity for overseas acquisitions.Firstly, this paper briefly reviews the concept and classification of cross-border mergersand acquisitions. Then by following the order of time and country, bank cross-border M& A representative theories are reviewed. On its basis, the second chapter traces themotivations of participating in cross-border M & A of our state-holding banks. Thecommon motivations include: operational synergies and financial synergies, followingthe customers, avoiding supervision and controlling risk, there are also some uniquebackground and distinctive motivations faced by our state-holding banks, such as "goingout" strategy, pursuing the experience curve effect, deploying the surplus funds and theneed for mixed operation.The third chapter uses a SWOT analysis model to explain the situation sorted by fourcategories one by one from the inside to the outside of the cross-border M & A faced bythe state-holding banks, the strengths, weaknesses, opportunities and threats. Theadvantages include: encouragement policies, national reputation support, strong capitaland financial strength, great size, large potential of growth and certain understandingabout international financial markets. Disadvantages include: insufficient appropriatelegal protection, short of supports from developed M & A intermediary services, lack ofunderstanding of M & A targets and cross-border M & A experience. Opportunitiesinclude: low acquisition costs caused by the financial crisis and the appreciation of RMB,the acquisition demands brought by the global financial crisis, massive demands from"going out" Chinese enterprises, and the international M & A experiences from foreignbanks. Threats include: the uncertainty of host country's political and legal environment,the negative impact from global financial crisis, fierce competitions in the international M & A markets, and the peril of post-merger integration.Chapter 4 discusses in detail about the factors that impact the overseas M & A path of ourstate-holding banks, including geographical factors, host country factors, target banksfactors. By analyzing four typical overseas M & A cases of Industrial and CommercialBank of China, the research paradigm of overseas M & A path is more connected to ourstate-holding banks. Finally, take the paths into the SWOT strategic matrix, theconclusion strategies lie in the overseas M & A strategic matrix.