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Chinese banks say they want to grow in the Italian financial sector

by Nicoletta Picchio

Jin Yangkun, general manager of the Milan branch of ICBC (Industrial and Commercial Bank of China), said the institution is ready and waiting to open its doors in Rome as soon as the Bank of Italy will permit it.

“We want to be a bridge between Italy and China, and beyond, given our strong international presence,” he said speaking at an industry panel. Turning to representatives from UniCredit and BNL seated at the table with him, he said ICBC hopes to “engage more actively with Italian banks.”

As an example, he brought up a case of a company in crisis, ACC Compressors, which was put in contact with a Chinese company in Guandong and, thanks to a deal between the two, will return to profit in 2016 - saving 144 jobs in Italy.

There are many such cases, said the general manager of the Milan branch of China Construction Bank, whose parent is also eyeing Italy with great interest.

“China isn’t a nation whose economy is galloping ahead any more, with low labor costs. The cost of labor at this point is rising 7% a year. We want quality production and Italy is an extremely attractive partner,” he said.

The Chinese footprint is still small “but if we consider how fast the Chinese have moved in the past two or three years, their presence in the financial sector could grow exponentially. In trade, our exports have surged tenfold in only a few years,” said Riccardo Monti, chairman of ICE - Italian Trade Agency, which sponsored the seminar on Italy-Chinese financial cooperation, with Chinese Ambassador Li Ruiyu.

Chinese banks, he noted, are massive, the biggest in the world in terms of market capitalization. “China is trying to internationalize its financial system and its currency. It wants to have a hundred big multinationals. The banks have been called up for duty,” he said.

There’s been a strong influx of Chinese investment in Italy and the goal is to have more, added Monti, to help finance Italian projects in third countries, especially major infrastructure projects with Chinese banks as full partners. ICE - Italian Trade Agency is exploring various avenues of cooperation, not just on exports but also on joint-ventures.

SACE, Italy’s export credit agency, is also on the front line, noted CEO Alessandro Castellano. It recently signed a deal with the Bank of China to expand trade and investment between the two nations, facilitating access to sources of financing for Italian and Chinese companies. The pact follows several others: with the Export-Import Bank of China, with China Merchants Bank, and with Sinosure.

“It’s hard to continue exporting in the same way. One needs production joint-ventures,” says Castellano, whose goal is to have something like an Export-Import Bank in Italy, similar to ones that currently exist in 28 other nations.

“It seems that the Chinese are more proactive than the Europeans. I’ve had meetings with institutions interested in investing in capital markets.”