Mergers, Acquisitions and Takeovers Case Study

China Merchants Bank: Challenging Times Ahead

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Abstract:

China Merchants Bank (CMB) was sixth largest share-holding commercial bank owned by corporate legal entities. It offered wide range of product and services to individual and corporate customers through extensive network of more than 463 branches, 747 self-service counters and 2,288 ATMs located in 39 cities. CMB was the leading issuer of credit cards in China. It had 42% of the market share in China’s dual-currency credit card segment in 2005. Also, CMB was pioneer amongst other commercial bank to launch a series of e-banking distribution channels like on-line banking, phone banking, mobile banking and self service banking in China.

But, China’s accession to WTO in 2001 promised opening up of finance sector by end of 2006. The foreign institutions would be allowed to offer services in local currency to all retail and corporate customers across the country. In China, CMB faced stiff competition from Citigroup and Hong Kong and Shanghai Banking Corporation (HSBC) in the credit card segment. Also, CMB faced tough competition from the “Big-four” Chinese banks in terms of their total assets base and extensive branch network.

The case details about with the opening of the China’s banking industry and strengthening of competition, the times ahead for CMB were challenging.

Pedagogical Objectives:

• To understand Chinese bankcard market
• To study the market development strategy adopted CMB
• To understand the competitive scenario of Chinese bankcard sector
• To understand the impact of government policy.

Keywords : Mergers,Acquisitions,Alliances Case Study;China Merchants Bank (CMB); Chinese Bankcard Market; SWOT Analysis; Competitive Scenario; Foreign Banks in China; Entry Level strategies; Joint Ventures; Strategic Alliance; Banking Sector Reform in China; China UnionPay (CUP); “Big-four” Chinese Banks; Citigroup in China; HSBC in China

Contents : 
The Chinese Bankcard Market
China Merchants Bank Co. Ltd
Imminent Competition
China’s Emerging Middle Class Segment
China Merchants Group
CMB Key Financial Indicators
Key Events in China’s Banking Reform