Magazine article American Banker

UCBH Would Be 1st to Do Whole-Bank Deal in China

Magazine article American Banker

UCBH Would Be 1st to Do Whole-Bank Deal in China

Article excerpt

UCBH Holdings Inc., which caters to Chinese-Americans, is about to become the first U.S. banking company to own a bank outright in China.

The San Francisco company announced Tuesday that it has a deal to buy the $217 million-asset Business Development Bank Ltd. in Shanghai for $205 million in cash.

UCBH has a branch in Hong Kong and representative offices in Shenzhen and Taipei, but the deal for the privately held Business Development Bank would give the $10.4 billion-asset company its first full-service branches in mainland China.

To date only a few large banking companies, such as Citigroup Inc., have bought minority interests in Chinese banks or formed joint partnerships with them.

UCBH will be the first among its peers to have a full-service banking platform not only in Hong Kong, but also in mainland China, which will enable them to capture more of the trade finance flows between the U.S. and China, said Lana Chan, an analyst at Bank of Montreal's BMO Capital Markets in New York.

Once the China Banking Regulatory Commission approves the landmark deal, Ms. Chan said, UCBH's competitors likely will follow, including the $8 billion-asset Cathay General Bancorp and the $10.8 billion-asset East West Bancorp, two Chinese-American banking companies based in Los Angeles.

Jonathan Downing, UCBH's director of corporate development and investor relations, said the deal would give his company a leg up on its competitors.

We'd be able to get more customers on both sides of the Pacific Rim, because Chinese manufacturers and American wholesalers could deal with the same bank, Mr. Downing said. Instead of having to transmit letters of credit and other shipping documents from one bank in China to another in the United States, for example, a Chinese manufacturer could just drop off the documents at a UCBH branch, and money from a U. …

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