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Take over of America: Chinese banks increase their lending in the United States

By Catholic Online (NEWS CONSORTIUM)
August 29th, 2012
Catholic Online (www.catholic.org)

China's top banks have increased their lending activities in the U.S. as companies here begin to diversify their funding sources, seeking to penetrate more deeply into the world's second-largest economy.

LOS ANGELES, CA (Catholic Online) - "Many global banks have been deleveraging as a result of the 2008 global financial crisis and the debt crisis in Europe," Liao Qiang, Chinese banking analyst at Standard & Poor said. "Their retreat in lending markets provides opportunities for Chinese banks to deepen relationships with the multinational companies and steadily increase their international presence."

According to data from Dealogic, Chinese banks' share of U.S. syndicated lending has risen to 6.1 percent of the total market so far in 2012, which is up from 5.1 percent last year, So far this year, the total value of syndicated loans from Chinese banks into the U.S. has reached $51 billion.

The fresh round of lending by Chinese banks comes as their balance sheets compare favorably with U.S. counterparts.

Reflecting this new reliability, 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. The long-term credit ratings of Bank of America, Citigroup and Goldman Sachs were cut to A-, in the meantime.

Bank of China is also involved in a $1.4 billion syndicated loan to Zimmer Holdings, the medical device company, and Bank of East Asia is part of a $575 million loan syndication to Constellation Brands, the wine and beer group.

Industrial and Commercial Bank of China took part in an $11.8 billion syndicated loan for Wal-mart, the U.S. retailer.

General Manager of ICBC's New York branch, Bi Mingqiang, said the bank was seeking long-term lending relationships with U.S. companies which had a presence in China and elsewhere.

UPS says that linking with a Chinese bank has 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.

Head of Corporate Banking at CCB John Weinshank 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 U.S. has risen from $600 million in 2009 to $2 billion this year, while ICBC, which established a New York branch in 2008, had made more than $1.3 billion of loans to U.S. companies at the end of 2011 compared with zero at the start of 2009.

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