Banking market entry in China
Last call for foreign banks to enter through M&A?
As interest in China remains high, many foreign banks are evaluating potential market entry approaches to the market. However, the route to entry can be complex – especially to secure a banking license to enable a full scale presence.
The M&A route is an alternative route to enter the market and side-step some of the timeline factors and challenges of building a business from scratch. However, controlling stakes are out – and many legacy issues will need to be dealt with at the remaining banks including NPLs (Non Performing Loans), weak risk management, limited product offering and a legacy of difficulty attracting the best talent.
Compounding the M&A route is a rapidly shrinking pool of targets and rising prices.
This article looks at the basics of entering the market through M&A – and flags some of the key challenges that will need to be grappled prior to completing a deal.