Study On The Motivation And Effect Of Chinese Commercial Banks Introducing Foreign Strategic Investor

With the process of China’s banking reform, domestic commercial banks haveset off a climax of introducing foreign strategic investors (FSIs) in recent years. In2005, with the related policies issued by the regulatory authorities, the introduction ofFSIs stepped into a climax. However, since2008FSIs that affected by theinternational financial crisis, the European debt crisis and other macroeconomicenvironment factors have started to reduce their shares. How to evaluate the pros andcons of introducing foreign strategic investors becomes the focus of attention ofscholars.This paper selects the typical case of China CITIC Bank introducing BBVA asFSI. The paper mainly divides into four parts: the introduction, case text, case studyand case summary. The introduction includes the research background andsignificance, and reviews the summary of relevant literature on FSIs in domestic andinternational academic earth. The part of case text mainly describes the case of ChinaCITIC Bank introducing BBVA as FSI. After briefly describing the background of thiscase occurred and the overview of both, it elaborates on the process of this case.Case analysis is the focus of this paper. Firstly, based on the intrinsic andextrinsic motivation of their strategic cooperation, it analyzes their bilateral strategiccooperation in recent years. Secondly, in order to study the effect, this chapteranalyzes thoroughly in the short-term stock market effects and long-term financialeffects, and qualitatively analyzes the impact of BBVA’s recent reduction. It appliesthe Event Study method on BBVA’s holdings and reduction for analyzing short-termstock market effects, while selecting seven major financial indicators to study thesingle and integrated financial effects in long-term financial effects analysis. Amongthem, it uses Factor Analysis for the sample of12listed banks from2005to2013tobuild an integrated performance index describing integrated financial effects. Itconcludes that introducing BBVA can enhance shareholder value in the short term and significantly improve most of the financial indicators, but the role of improvingintegrated performance index is limited. Finally, it summarily evaluates that theintroduction of CITIC Bank does not achieve the desired effect.In the summary section, it notes that there are some problems in the strategiccooperation and proposed several suggestions for CITIC Bank and Chinese bankingindustry.