Skip to comments.China: Beijing buys into leading Australian banks
Posted on 01/04/2008 7:39:09 AM PST by TigerLikesRooster
Beijing buys into leading Australian banks
By Tim Johnston
Friday, January 4, 2008
SYDNEY: The Chinese state body responsible for managing the country's massive foreign reserves is starting to diversify its holdings, buying up stakes in three Australian retail banks during the past two months.
Australian bankers say that a Hong Kong-based subsidiary of China's State Administration of Foreign Exchange, which controls more than $1.4 trillion in assets, has bought minority stakes of less than 1 percent in ANZ Bank, Commonwealth Bank of Australia and National Australia Bank.
The SAFE purchases were first reported in the Australian press in late December. This week, The Financial Times said that they were undertaken by the SAFE Investment Company, a Hong Kong subsidiary of SAFE, which is headquartered in Beijing.
Each stake would be worth less than 200 million Australian dollars, or $176 million, according to media reports.
"Our understanding is that it would be a portfolio investment and a better way of managing their exposure to the Australian dollar," an ANZ spokesman, Paul Edwards, said Friday. He said there had been no discussions between ANZ and its new investor.
Commonwealth Bank and National Australia Bank declined Friday to confirm or deny the reports, saying they did not comment on changes to their share register.
Officials at SAFE in Beijing had not responded to written requests for comment as of late Friday.
The Australian investments would fuel speculation that the Chinese are in the market to take more major stakes in overseas banks.
The Industrial and Commercial Bank of China - the world's largest bank by market capitalization - is rapidly expanding abroad. In October, ICBC took a 20 percent stake in Standard Bank, South Africa's largest financial institution.
(Excerpt) Read more at iht.com ...
This is not going to be good.
This isn’t entirely surprising. Aussie banks, like many banks around the world, are taking their lumps because of an excessively loose global credit culture - aided and abetted by the easy availability of buyers for asset backed securities. Those buyers are now gone, and the loans that they have made (and unfortunately for them, are still on their books) are going bad much faster than they or anyone else anticipated. It’s a global phenomenon. In time, we will see government bailouts of Chinese banks once the Chinese securities and real estate bubbles burst.