Three large western banks, Deutsche Bank, UBS and Bank of America, have been named among a group of around ten financial institutions reported to be currently in negotiations with Bank of China, which along with China Construction Bank, is looking for foreign partners ahead of plans to enter an overseas initial public offering later this year or early next year.
The announcement of the names of potential partners comes as a break with recent protocol, which has seen the Chinese bank refuse to discuss details of negotiations. However, as the Bank of China is believed to have been engaged in seeking a western partner for around a year, the new openness could be a sign that it is looking to accelerate the process.
According to FT reports, Bank of America is prepared to invest between $1 and $2 billion in Bank of China in order to seek a credit card joint venture. However, a much more significant cash injection would be needed for a western bank to gain any sort of controlling stake.
Overseas investment is seen as a potential solution to China’s need to clean up its financial services sector, which has been hit by corruption and embezzlement scandals, ahead of plans to open up the industry to foreign competition in 2007.
