China’s top banks are stepping up their lending activities in the US as large US companies diversify their funding sources and seek to penetrate more deeply into the world’s second-largest economy.
Chinese banks’ share of US syndicated lending has risen to 6.1 per cent of the total market so far in 2012, up from 5.1 per cent last year, according to data from Dealogic. So far this year, the total value of syndicated loans from Chinese banks into the US has reached $51bn.
Liao Qiang, Chinese banking analyst at Standard & Poor’s, said: “Many global banks have been deleveraging as a result of the 2008 global financial crisis and the debt crisis in Europe. Their retreat in lending markets provides opportunities for Chinese banks to deepen relationships with the multinational companies and steadily increase their international presence.”
The increased syndicated lending by Chinese banks comes as their balance sheets compare favourably with US counterparts.
Standard & Poor’s last year upgraded the long term credit ratings of Bank of China and China Construction Bank from A- to A. The credit rating agency maintained the rating of Industrial and Commercial Bank of China (ICBC) at A. At the same time, the long-term credit ratings of Bank of America, Citigroup and Goldman Sachs were cut to A-.
Among the latest deals, Bank of China is involved in a $1.4bn syndicated loan to Zimmer Holdings, the medical device company, and Bank of East Asia is part of a $575m loan syndication to Constellation Brands, the wine and beer group.
Industrial and Commercial Bank of China took part in an $11.8bn syndicated loan for Walmart, the US retailer.
Bi Mingqiang, general manager of ICBC’s New York branch, said the bank was seeking long-term lending relationships with US companies which had a presence in China and elsewhere. The bank provides credit to United Parcel Service, Pfizer and Dell.
UPS said linking with a Chinese bank had made it easier to conduct business in renminbi, while Dell said it had developed relationships with Chinese banks for the same reason.
CCB’s clients include General Electric, and the bank has also had discussions with Caterpillar, Walt Disney, Tiffany and Cargill.
John Weinshank, head of corporate banking at CCB, added that lending was only a starting point to extend into other businesses, such as deposit and trade finance.
CCB’s lending business in the US has risen from $600m in 2009 to $2bn this year, while ICBC, which established a New York branch in 2008, had made more than $1.3bn of loans to US companies at the end of 2011 compared with zero at the start of 2009...
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