Minsheng Bank
Government regulation affects the international expansion in a few different ways. In China, most banks are state-owned. Those that are not, such as Minsheng, still are subject to considerable regulation. The government had to approve the purchase of the shared in UCBH, and it had to approve UCBH's purchase of BDB. The bank is free to pursue whatever opportunities it desires, but all transactions that involve overseas expansion are subject to government approval, and the process is not particularly transparent. It is expected, however, that the regulatory regime is going to be less strict in the future, following China's accession to the World Trade Organization. As regulations decrease, opportunities both for Chinese banks to expand internationally, but also for foreign banks to move into the Chinese market.
That said, the government still controls "the establishment, registration, scope, qualification, supervision, dissolution and liquidation of foreign financial institutions" in the country, and the government also maintains control over foreign exchange. Part of the regulatory environment is guided by trade agreements. Many nations are protective of their banking sectors, and so they are usually...
The Chinese market has opened up somewhat, but unless China opens its markets fully, Chinese banks will be subject to regulation when they attempt to expand overseas. Many nations maintain foreign ownership rules, and as long as China has similar rules, there will be limits on the size of stake that Minsheng can acquire of a foreign bank.
2. Minsheng to this point has taken a conservative approach to international expansion. It has acquired a minor U.S. bank, and did so in two transactions. UCBH as an acquisition was strategic, as the company is based in California and has links with China. The two have come together because there is mutual benefit to doing so, as they give better access to each other's markets to their clients and can probably lower the cost of doing business between the U.S. And China as a result.
It is expected, however, that Minsheng will need to continue to expand internationally. As the Chinese banking market becomes more open, and its banks seek to spend their capital on building a global presence, it is expected that many Chinese banks will expand overseas. In a way, Minsheng should base its strategies more on its…
