New M & A: Bank Of Cross-border Mode Of Operation

Economic globalization and financial integration is the main trend today, whose features include the deregulation of laws and rules for finance, the internalization of companies and non-financial institutes' penetration into the domain of banks. This imposes challenge to traditional banking and compels them to go internationalized and operate universally.Before and after China's entrance to WTO, transnational banks poured into China .In the 1990's, transnational banks invested in China through ways of office and branch. With the development of the opening up policy, transnational banks changed to use transnational M&A as the main way (now in the form of share holding in China' s banks) in China, which will be also the main way for the transnational banks to expand in China. As measures, China's banks should improve management, reduce the rate of non-performance loans, increase new products of service and upgrade technology to maintain the market share in domestic market, and expand overseas to strengthen competitiveness and increase profit. The main way for the transnational operation of China' s banks, as a whole, is investment. While in recent years, there are a lot of M&A activities, such as the M&A of ICBC and BC in Hong Kong. This dissertation, in the light of the theory of the transnational operation of banks, analyzes features and merits of investment and M&A in banking transnational operation, and factors considered in making choice, especially when entering China. It is concluded that the way adopted by transnational banks is changing from investment to M&A, and M&A will be the main way in the future. Next this thesis gives a description and explanation of the investment and M&A in overseas for China' s banks and the factors considered. China's banks should learn the lessons from transnational banks' successful M&A activity in China and experience of M&A abroad of ICBC and BC, make a full use of capital operating in global market, and expand in overseas through M&A. Accordingly, this dissertation gives some suggestions about the M&A modes for China' s banks.