KPMG Industry Updates - Issue 5, September 2013
Chinese banks have been actively engaging in cross-border M&A activities in recent years to fulfill their globalization strategy. Nevertheless, not every deal meets their expectations. In addition to the high risk and complexity of carrying out overseas acquisitions, Chinese banks have had some drawbacks due to inadequate strategy, human resource and experience, which resulted in insufficient due diligence, poor timing and even huge financial losses. Using cash payment and acquiring from a narrow range of targets also serve as disadvantages for Chinese players. In order to lower risks for cross-border acquisitions, Chinese banks should refer to successful examples of foreign banks and redefine their globalization strategy, adapt their cross-border acquisition model, cultivate their own talents, focus on integration efforts, make full use of financial instruments and improve their internal controls.