WestLB chairman aims to avoid JV with Chinese partner
Dr Thomas Fischer, chairman of WestLB, says he would prefer to enter China with a Hong Kong partner.
In a lightening visit to Hong Kong before moving on to Singapore, WestLBÆs chairman Thomas Fischer emphasised the company's wish to expand its presence in China and India. These markets currently contribute only a small amount to the bankÆs revenue, but are the fastest growing.
However, Fischer says that given the groupÆs lack of experience in China it would prefer to be guided into China by a Hong Kong entity. Fischer would not disclose who might be in the running for the role.
He also says that the bank is not interested in following the examples of banks such Royal Bank of Scotland and Bank of America which have taken strategic stakes in Bank of China and China Construction Bank.
ôWe donÆt see how û assuming you are not primarily interested in a financial investment û you can get business results from a minority strategic investment. We are interested in cooperating in a very specific targeted business,ö says Fischer.
WestLB is a Landesbank meaning it is owned by one of Germany's states. It prides itself on its structured finance solutions. Fischer emphasises that these days the bank is distancing itself from plain vanilla lending in favour of the rarefied area of derivatives, securitisation, and tailor-made infrastructure financial solutions.
Despite being based in Duesseldorf, close to the Franco-German border, the bank has recently participated in a number of deals in Asia, including a role in the underwriting a Ç900 million syndicated loan for Hutchison Telecom last year; a Ç500 million loan for IndiaÆs Reliance Infocomm; similar deals for AustraliaÆs RiverCity Motorway and AsiaLion International; and financing China EasternÆs acquisition of three aircraft last year, a deal worth $315 million.
The delegation in Hong Kong last week was headed by Fischer, who was appointed as chairman in January this year, and his colleague Robert Stein who has been on the board since 2004. Both men have been mandated to turnaround a bank that has grown fat and lazy on its triple-A credit rating. The rating is given to WestLB because of its ownership by the state of Nordrhein-Westphalien, one of GermanyÆs wealthiest regions.
ôIn the old days, we could always offer the cheapest money to our corporate clients because of our credit rating. ThatÆs where our strength lay. But that has changed and we are now only interested in value-added financial engineering,ö notes Fischer, who is clearly positioning the bank to be one of the winners in the wave of consolidation which is predicted to sweep GermanyÆs banking sector.
Last year, GermanyÆs Landesbanks were stripped of the triple-A rating they automatically received by reason of their affiliation to their æLandÆ. This change is forcing banks to move up the value chain or face being bought by their rivals.
At WestLB, the turnaround appears to be on track, with the bank earning Ç604 million before tax last year, compared to a loss of almost a billion euros in 2005.
ThatÆs set to continue, says Fischer, thanks to plans to further the bankÆs international footprint. ôAs our German clients go abroad to China, we are following them. We also feel that our connections to German clients will help us penetrate the China markets,ö he says.
WestLB has previous experience with emerging markets having entered Japan in 1977. Though the foray hasn't been a resounding success. The bankÆs presence in Japan is still under 100 people and the contribution to total revenues is miniscule.
However, Fischer says that given the groupÆs lack of experience in China it would prefer to be guided into China by a Hong Kong entity. Fischer would not disclose who might be in the running for the role.
He also says that the bank is not interested in following the examples of banks such Royal Bank of Scotland and Bank of America which have taken strategic stakes in Bank of China and China Construction Bank.
ôWe donÆt see how û assuming you are not primarily interested in a financial investment û you can get business results from a minority strategic investment. We are interested in cooperating in a very specific targeted business,ö says Fischer.
WestLB is a Landesbank meaning it is owned by one of Germany's states. It prides itself on its structured finance solutions. Fischer emphasises that these days the bank is distancing itself from plain vanilla lending in favour of the rarefied area of derivatives, securitisation, and tailor-made infrastructure financial solutions.
Despite being based in Duesseldorf, close to the Franco-German border, the bank has recently participated in a number of deals in Asia, including a role in the underwriting a Ç900 million syndicated loan for Hutchison Telecom last year; a Ç500 million loan for IndiaÆs Reliance Infocomm; similar deals for AustraliaÆs RiverCity Motorway and AsiaLion International; and financing China EasternÆs acquisition of three aircraft last year, a deal worth $315 million.
The delegation in Hong Kong last week was headed by Fischer, who was appointed as chairman in January this year, and his colleague Robert Stein who has been on the board since 2004. Both men have been mandated to turnaround a bank that has grown fat and lazy on its triple-A credit rating. The rating is given to WestLB because of its ownership by the state of Nordrhein-Westphalien, one of GermanyÆs wealthiest regions.
ôIn the old days, we could always offer the cheapest money to our corporate clients because of our credit rating. ThatÆs where our strength lay. But that has changed and we are now only interested in value-added financial engineering,ö notes Fischer, who is clearly positioning the bank to be one of the winners in the wave of consolidation which is predicted to sweep GermanyÆs banking sector.
Last year, GermanyÆs Landesbanks were stripped of the triple-A rating they automatically received by reason of their affiliation to their æLandÆ. This change is forcing banks to move up the value chain or face being bought by their rivals.
At WestLB, the turnaround appears to be on track, with the bank earning Ç604 million before tax last year, compared to a loss of almost a billion euros in 2005.
ThatÆs set to continue, says Fischer, thanks to plans to further the bankÆs international footprint. ôAs our German clients go abroad to China, we are following them. We also feel that our connections to German clients will help us penetrate the China markets,ö he says.
WestLB has previous experience with emerging markets having entered Japan in 1977. Though the foray hasn't been a resounding success. The bankÆs presence in Japan is still under 100 people and the contribution to total revenues is miniscule.
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