November 8, 2012 (Argentina time), ICBC got approval from Central Bank of Argentina to take over 80% stake in the Standard Bank Argentina. This marks the first acquisition of a Latin American financial institution by a Chinese bank, also for the first time a Chinese bank acquires a mainstream commercial bank outside China (excluding Hong Kong, Macau). After the takeover, ICBC Argentina Branch will become the largest Chinese bank in Latin America with the most extensive branch network and biggest business scale.
Argentina, the second largest economy in South America and an important member of the "Common Market of the South", has considerable influence to unify its neighboring countries in an economic bloc. As the second largest trading partner to Argentina, China is highly complementary with Argentina in economy. China's demand for energy and agricultural products provides a vast overseas market for Argentina, a country with a small population but rich in resources. China's competitive edge in infrastructure construction and manufacturing appeals to Argentina's need of economic development. Chinese companies have made huge investments in Argentina's energy sector and infrastructure with impressive progress. A Chinese financial institution of high visibility in Argentina is significant to support the trade and economic activities between China and Argentina since there is no Chinese bank in Argentina as of today.
Under the approval of Board of Directors, ICBC concluded an agreement on August 5, 2011 with The Standard Bank of South Africa ("Standard Bank") and the holding companies of the Werthein and Sielecki families on the sale and purchase of 80% stake in Standard Bank Argentina. (Standard Bank's shares will be reduced to 20% after the takeover). The acquisition is capped at USD 650 million. Standard Bank Argentina is a subsidiary bank of Standard Bank in Argentina with full licence, ranking No.12 among the 80 financial institutions in Argentina. Standard Bank Argentina dated its root to BankBoston Argentina (a US bank) established in 1917. In Argentina, Standard Bank Argentina has a network of nearly 100 branches and 700+ ATMs serving 910,000 personal customers, 30,000 small-and-medium enterprises and 1,500 corporate clients. At the end of 2011, Standard Bank Argentina's total assets reached USD 3.8 billion and posted USD 84.40 million in annual net profit. The Bank's strong profitability and good asset quality are demonstrated by its asset return rate (2.4%), capital return ratio (25.1%) and bad loan rate (1.2%). Standard Bank Argentina maintains its good momentum with a total asset of USD 4 billion and a net profit of USD 86.6 million for the period ending September, 2012.
The approval from Central Bank of Argentina signifies the prerequisites for the acquisitions have been met fully. In the next stage, ICBC and the transferors (Standard Bank, holding companies of the Werthein and Sielecki families), will work together on the share transfer as early as possible. ICBC being the controlling shareholder will send Board directors, senior executives and management teams to Standard Bank Argentina to ensure stable operation and smooth takeover. Existing employees and management staff of Standard Bank Argentina remain in office. ICBC will appoint respected Argentine professionals as independent directors to join the management team. The stable and healthy growth of Standard Bank Argentina will be supported by ICBC's strong finance, IT technology, customer base and global network. ICBC will introduce more Chinese companies to invest in Argentina and provide more convenient financial services to companies of both countries, bringing more benefits to Argentine companies and people.
ICBC has escalated its global footprint to cope with the globalization of customers and markets during the past few years. By the end of September, 2012, ICBC has set up a global network of 270 overseas branches spreading 35 countries/territories. This global service platform, together with a presence in Africa through holding a 20% stake in the Standard Bank of South Africa, covers all the major international financial centers and China's trading regions with well-defined hierarchy, reasonable positioning, diversified channels and efficient operation. The ICBC global network is a prime example of how a financial institution serving companies to "go global". ICBC has made good progress in overseas expansion with good earnings. The growth higher than domestic branches especially in the first three quarters of this year bears testimony to the strategy of spreading effort on a global scale. By the end of September, 2012, asset balance in all ICBC overseas branches stood at USD 154.5 billion, a 21.5% increase from the beginning of the year. The USD 796 million in net profit during the first nine months represented a surge of 27.2% year-on-year. The rate of non-performing loans was 0.45%. Asset and profit growth of ICBC overseas branches is already higher than those of domestic branches.