Financial services M&As being more active this year
According to a PricewaterhouseCoopers (PwC) report, because of more Chinese Financial institutions expanding their business, the financial services M&As in Asia will be more active.
215 senior financial services executive, of which 20% come from the Chinese mainland and Hong Kong, finished the survey.
The survey showed that comparing with 2008, the figure of respondents intending to make an acquisition increases 4% this year. Most Chinese mainland and Taiwan respondents like to use M&A deals.
Nelson Lou, transaction partner, PwC, said that the keenness in China should owe to stronger balance sheets and fewer use of outbound M&A activity in the past few years.
Among the respondents, over 63% people from Chinese mainland are actively planning to expand their business in the current environment while the figure is only 43% among HK respondents.
The potential driver for M&As in china will be the need to expand business lines and enlarge the sources of fee income. Over 42% of respondents who based on Chinese market would enlarge their business, 42% are developing a new business line, and 69% are entering the newer markets.
Matthew Phillips, transaction partner, PwC, said that since activity in china has been low till now, they are rebuilding their confidence and he would not be surprise to see the renew in foreign trade by Chinese institutions in a few mouth.
In 2008 Chinese banking sector use financial service M%As to restructure. Central Huijin Investment Co,s inject $19 billion to the Agricultural Bank of china, making it the largest transaction.
Nearly 50% of respondents thought the main barrier for M&A to develop its business in Asia is asset valuation. Over 42% of the respondents mentioned the lack of clarity on financial position of many institutions as the most difficult to fair valuation, while 40% worried about the market stagnant.
Transaction value of financial service of several areas in Asia-Pacific, including banks, insures, securities firms and mutual funds, decreased from $125.96 billion in 2007 to $99 million in 2008.
The Economist Intelligence Unit finished the survey in January and February 2009, which is the fourth PwC report on financial services M&As.
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