Moody's: Long-term bullish on Chinese banks ' access to global markets

Securities Times reporter Guo Recently, China Construction Bank (601939) opened its first U.S. branch and the first wholly-owned European bank in New York and London respectively. CCB's focus in New York and London will be dollar clearing services and derivative products. Moody's, one of the three major rating agencies, said it had no direct impact on CCB's rating because of the small size of the business, but Moody's said the move was positive for its long-term brand value.　　In addition, Moody's believes that further expansion of Chinese banks overseas will be positive in the long term, but will not bring any ratings impact in the short term. Moody's noted that the decline in global competition in the aftermath of the financial crisis offered opportunities, but for Chinese banks, risk management was one of the biggest challenges for Chinese lenders when they were doing business in the West, because unlike in China, Western governments do not guarantee spreads and currencies are freely convertible. But Chinese banks can gain a lot in terms of acquiring market information, banking expertise and talent.　　Western developed markets can become the barrack of Chinese banks, and Chinese banks will be able to accumulate experience while increasing their level of operation and risk management. Moody's believes that Chinese banks have been cautious about overseas expansion since the financial crisis. Because of its low capital adequacy ratio, the capital level will be under pressure if it expands aggressively overseas. And the slowdown in the domestic economy could be prolonged, and the quality of bank loans could worsen and thus cause a drop in profits, which would increase uncertainty about the operation of Chinese banks. In addition, Chinese banks need to meet the regulatory requirements of a number of countries overseas, and will face cultural differences and overseas financing issues, these potential obstacles are not to be underestimated.