China Construction Bank to Open Subsidiary in Brazil

Joe Leahy in Sao Paulo
Bloomberg | Getty Images

China Construction Bank is in talks to buy a bank in Brazil amid plans to open a subsidiary in Latin America’s biggest economy, according to officials and people familiar with the matter.

The move comes as the leading Chinese banks are moving into Latin America to service rising trade with the region and to encourage South American exporters to begin trading in China’s currency, the renminbi , rather than the dollar.

John Weinshank, senior vice-president at CCB’s New York branch, told a banking conference in Miami that the executive board of the world’s second-largest lender by market value had approved a proposal to open a subsidiary in Brazil.

“We are following our customers,” Mr Weinshank told the annual conference of Felaban, the Latin American banking federation, adding that the proposal still needed the approval of regulators in both countries.

Separately, a person in Sao Paulo familiar with the matter said CCB had opened talks with the owners of a small Brazilian bank over a potential acquisition of the institution.

The person declined to name the target, but said entry into Brazil through an acquisition would provide CCB with the necessary licenses and permits more easily than starting from scratch.

China overtook the U.S. to become Brazil’s largest trading partner in 2009 and its biggest foreign investor last year as companies ranging from car manufacturers to engineering firms are looking to set up in the Latin American economy.

Chen Jin, head of international financial institutions for Industrial and Commercial Bank of China in Beijing, told the Felaban conference that the group is establishing branches in Brazil and Peru as it seeks to help its clients with their businesses in Latin America.

ICBC has also bought 80 percent of Standard Bank in Argentina, a deal that is awaiting shareholder approval, she said.