Sunday, July 03, 2005

Experts believe Chinese banks eyeing mortgage lending in US

Real estate experts said this week at the Reuters Real Estate Summit in New York believe that China's interest in the United States would include land and buildings in major American cities.

Owen Thomas, Morgan Stanley managing director and the head of its real estate division said, "I don’t think it’s in the near term, but three or four years down the road, it wouldn’t surprise me."

"I’ve heard anecdotally about Chinese banks looking at mortgage lending in the United states and it would not surprise me at all to see some equity investment at some point."

Morgan Stanley incidentally, won the lead underwriting role for China Construction Bank's upcoming initial public offering.

Sam Zell, chairman of Equity Office Properties Trust and Equity Residential, said he wouldn’t be surprised if Chinese real estate investment somewhat mirrors Japanese investment in US assets 20 to 30 years ago.

He also said that "China is some place you can’t afford not to be aware of and you can’t afford not to understand."

Many U.S. companies share his feelings. Bank of America Corp. is poised to penetrate the Chinese consumer-banking market, and J.P. Morgan Chase & Co. seems likely to follow.

The Chinese Government tight restrictions on foreign banks operating in the country are expected to be loosened starting in 2007.

British banking giant HSBC Holdings Plc hasholds 19.9 percent stakes in Bank of Communications, China's fifth-largest lender, and Ping An Insurance Co., which is the country's second-largest life insurer, as well as a smaller interest in Bank of Shanghai.

Citigroup Inc. holds a 4.6 percent stake in Shanghai Pudong Development Bank and, like HSBC, has opened a handful of retail branches in China.

Last year, Goldman Sachs Group Inc grabbed a 66 percent stake in a Chinese securities firm effectively allowing them to arrange equity and bond deals in Chinese markets.