A surge in Chinese cross-border technology and telecoms deals has helped mergers and acquisitions in Asia Pacific cross $1 trillion for the first time but mainland banks are missing out on the payoffs as they badly trail global rivals in advisory work.
While low fees have helped Chinese banks to win market share from U.S. and European counterparts in stock offerings and loans, they figure nowhere among the 10 biggest M&A advisers by value of deals, Thomson Reuters data up to the end of November showed.
China’s biggest investment bank, CITIC Securities (600030.SS), ranked 11th, advising on $68.7 billion worth of deals. The number of Chinese banks among the top 20 M&A advisers in the region fell to seven from eight and their market share slumped to 13.8 percent from 33.7 percent last year.
The Chinese banks’ struggles to emerge as leading advisers on big ticket acquisitions have curtailed their fee income growth at a time when the lending business is under pressure due to a slowing domestic economy.
“When Chinese companies go global, they will tend to call on banks and advisers who have global reach so there’s still a strong role for the international banks and advisers,” said Aga Guzewska-Radzka, consultant at Accenture Strategy in Hong Kong.
A push by Chinese state-owned enterprises and private companies to buy assets abroad and the massive restructuring of the region’s biggest conglomerates are driving the deal-making boom. The trend is expected to continue, bankers say. Read more