ICBC eyes more global roles after Petrobras -analysts

By Soo Ai Peng

September 7, 2010 6:41 PM EDT

Industrial & Commercial Bank of China (ICBC) could stake a claim as a global fundraising specialist, analysts said on Tuesday, after the bank secured a role in Brazilian oil giant Petrobras's record share offering.

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ICBC, the world's biggest bank by market value, said on Monday its Hong Kong unit, ICBC International, had joined other global names including Goldman Sachs and J.P. Morgan as a joint bookrunner in the $65 billion share sale by Petroleo Brasileiro SA, or Petrobras.

Petrobras's global stock offer -- the largest in capital market history -- would easily top the $22.1 billion initial public offering by Agricultural Bank of China earlier this year.

ICBC has an edge over its domestic rivals in gaining a foothold in global capital markets due to its leading position in China's investment banking scene, analysts said.

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"ICBC's investment banking business is probably the best-run compared with other Chinese banks. If it could make good use of its Hong Kong platform, it has the potential to expand beyond China and Hong Kong," said Jin Lin, an analyst at Orient Securities in Shanghai.

"In that sense, the Petrobras deal is quite a breakthrough for ICBC," he said.

China International Capital Corp (CICC) -- in which Morgan Stanley owns a stake that it wants to sell -- has always been considered the country's premium standalone investment bank.

ICBC said in a statement that the Petrobras deal marks "the first time that a Chinese investment bank is taking a key role in a major share issuance outside the mainland China and Hong Kong market."

The deal was "a key step by a mainland financial institution to expand its overseas business", ICBC said.

While the Petrobras deal would boost ICBC's profile globally, earnings contributions from its investment banking operations will remain insignificant given the sheer size of its loan business, analysts said.

Income from its investment banking business grew 21.3 percent to 8.7 billion yuan ($1.28 billion) in the first half of 2010, company data showed. That figure compared with its total net income of 84.6 billion yuan during the same period. ($1=6.787 yuan)