ICBC seeks to open first Brazil branch

The lender plans to establish full service unit in Sao Paulo with an initial capital of $100mn after expansion in US and Europe.

Industrial & Commercial Bank of China Ltd., the world’s biggest lender by market value, plans to open a bank in Brazil, extending its reach to Latin America’s largest economy after expanding in Europe and the U.S.

ICBC intends to set up a full-service bank, ICBC do Brasil Banco Multiplo SA, in Sao Paulo with initial capital of $100 million, Brazil’s central bank said in a statement. ICBC, based in Beijing, is seeking Banco Central do Brasil’s approval to become the second Chinese lender to establish operations after Bank of China Ltd. received authorization to open a branch in Brazil in February 2009.

The announcement came as Brazilian President Dilma Rousseff visited China, with plans to pressure government officials to buy more of the South American nation’s goods. ICBC agreed to buy 80 percent of Bank of East Asia Ltd.’ U.S. unit for $140 million in January, the first Chinese takeover of a U.S. retail bank, and added branches in Paris, Brussels, Amsterdam, Milan and Madrid the same month.

“This is part of a national ‘go-out’ strategy to deploy investment and capital in countries or regions where there are rich resources or booming trade and commercial activities by Chinese enterprises,” said Zhang Yidong, a Shanghai-based analyst at Industrial Securities Co.

Chairman Jiang Jianqing has spent more than $6 billion on acquisitions in regions spanning from Asia to South Africa and America over the past two years as he seeks to triple the share of profit coming from abroad to 10 percent. Operating income from ICBC’s overseas businesses accounted for 3 percent of its total at the end of last year, according to its annual report.

ICBC opened 12 overseas branches last year, taking the total to 203 and extending its reach to 28 countries and districts. These units had combined assets of $75.7 billion as of December, an increase of 45 percent from a year earlier, and their pretax profit rose 37 percent to $1.19 billion.

View the full story in Bloomberg.