What can a buck buy these days?  If you're ICBC, or Industrial & Commercial Bank of China Ltd., China's largest lender, you can take over the Prime Dealer Services unit of Fortis Securities.  The seller is France's BNP Paribas SA.

    Win-Win for ICBC, BNP.   BNP Paribas SA can dispose of the last remaining business unit of Fortis Securities for little or no cost.  BNP Paribas inherited Fortis Securities as part of its acquisition of troubled Fortis Bank of Belgium in early 2009.  But the B/D overlapped with BNP Paribas's existing U.S. operations.  So by transferring the Prime Dealer Services unit to ICBC, BNP Paribas avoided paying costs such as severance.  

ICBC, which is 70% government-owned, can potentially get into the lucrative business of underwriting securities in the U.S. market.  And, the transaction fits into its overseas ambitions while allowing it to get around tight regulatory restrictions on foreign purchases of deposit-taking U.S. banks and avoid any associated political backlash.  The Fortis unit currently provides clearing and financing services to 75 or so clients in the U.S. and Europe, complementing ICBC's clearing and custody business in Asia.

The new ICBC unit will focus first on the clearing of fixed-income securities and later examine other expansion opportunities, said Joseph Spillane - he's the former CEO of Fortis Securities and now CEO of the new ICBC entity, to be called ICBC Financial Services.  He predicts the unit, which currently is profitable, will bring in profits of $15 million to its new owner.  A growing number of loans in the U.S. are being made by foreign banks that generally avoided the disastrous boom-era real-estate loans and investments made by many U.S. and European financial institutions. Chinese banks are in a particularly strong position to expand in the U.S., despite their limited name recognition. Three of the 4 largest Chinese banks, including ICBC, have received approval from the Federal Reserve to open U.S. branches since the financial crisis erupted.

For further details, click onto:   [ WSJournal, 11/1 ]