Lender to become second Chinese bank in South American country

SAO PAULO, Brazil/NEW YORK - Industrial and Commercial Bank of China Ltd (ICBC), the world's biggest lender by market value, plans to open a bank in Brazil. The move will extend the lender's reach to Latin America's largest economy after expanding in Europe and the United States.

ICBC intends to set up a full-service bank, ICBC do Brasil Banco Multiplo SA, in Sao Paulo with initial capital of $100 million, Banco Central do Brasil, the country's central bank, said in a statement.

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ICBC, based in Beijing, is seeking the central bank's approval to become the second Chinese lender to establish operations in the country, after Bank of China Ltd received authorization to open a branch in Brazil in February 2009.

The announcement came as the Brazilian President Dilma Rousseff visited China, with plans to persuade government officials to buy more of the South American nation's goods. In January, ICBC agreed to buy 80 percent of the US unit of Bank of East Asia Ltd for $140 million, the first Chinese purchase of a US retail bank, and added branches in Paris, Brussels, Amsterdam, Milan and Madrid the same month.

"This is part of a national 'go-out' strategy to deploy investment and capital in countries or regions where there are rich resources or booming trade and commercial activities by Chinese enterprises," said Zhang Yidong, a Shanghai-based analyst at Industrial Securities Co.

ICBC Chairman Jiang Jianqing has spent more than $6 billion on acquisitions in regions ranging from Asia to South Africa and the Americas over the past two years as he seeks to triple the share of profit coming from abroad to 10 percent. Operating income from ICBC's overseas businesses accounted for 3 percent of its total at the end of last year, according to its annual report.

The bank opened 12 overseas branches last year, taking the total to 203 and extending its reach to 28 countries and districts. These units had combined assets of $75.7 billion as of December, an increase of 45 percent from a year earlier, and their pretax profit rose 37 percent to $1.19 billion.

ICBC has made an offer to buy the Argentine unit of Standard Bank Group Ltd, according to the Buenos Aires-based newspaper El Cronista on March 21.

The US deal, signed during President Hu Jintao's visit to the US, would give ICBC 10 branches in California and three in New York after approval by regulators in both countries.

President Hu is scheduled to meet the Brazilian President Rousseff on Tuesday and attend a summit of the BRICS nations (Brazil, Russia, India, China and South Africa) on Thursday. China imported $30.8 billion of goods from Brazil last year, an increase of 46.6 percent from a year earlier, Caixin magazine reported on Monday.

"We want to increase exports of goods and services with more value, more industrialized goods, and we'll also sign agreements in science and technology," Rousseff said in a weekly radio program posted on the presidency's website.

Bloomberg News