ICBC begins operating in Peru
Updated: 2014-02-10 05:50
By AMY HE in New York (China Daily Latin America)
Overall China has been intensifying its role in Peru through investment
China's largest bank began operating in Peru this week as part of increased expansion efforts in the country as more and more Chinese companies are investing on Peruvian commodities.
The Industrial and Commercial Bank of China's (ICBC) office in Lima will service Chinese corporations in Peru as well as Peruvian companies looking to do business in China, according to a statement, and will be the first Chinese bank operating in Peru's financial sector.
ICBC, whose net assets in 2013 totaled 4.62 trillion yuan ($762 billion), registered its stock shares on the Lima Stock Exchange in January, completing its requirements for entering the Peruvian market
"The entry into Peru strengthens our mandate to develop our business in the Pacific region," said Eduardo Patsias, deputy manager of corporate banking for ICBC's Peruvian branch, according to Reuters.
ICBC's expansion comes as China has recently pledged stronger ties with Peru in order to "bring bilateral relations to a new high," according to Xinhua.
At a meeting in Beijing last month, Zhang Dejiang, chairman of the Standing Committee of the National People's Congress, held talks with President of Peru's National Congress Fredy Otarola Penaranda, with Penaranda emphasizing more favorable business and legal environments that will benefit mutual investments in trade, finance, tourism, and infrastructure, Xinhua said.
China has been intensifying its presence in Peru with increased investment and the country became Peru's number one trade partner in 2011. China has been key to Peru's growth, with the Andean nation's exports to China expected to grow 15 percent in 2014, according to the Peruvian-Chinese Chamber of Commerce.
In addition, Peruvian exports of non-traditional agricultural products, like grapes and algae, grew 64 percent in the period between January and August 2013 compared to the same period the year prior.
China's investment in Peru is primarily in the mining sector, with Peru's mining potential being of "great interest" to China, said Cynthia McClintock, professor of international affairs at George Washington University, early last year. In September, two state-owned Chinese mining companies submitted bids for a $5.9 billion Peruvian mining project, which is expected to start producing copper later this year.
China and Peru signed a free-trade agreement in 2009 and since then trade between the two countries has almost doubled. Though trade has focused primarily on Peru's commodities, the trade agreement is likely to increase China's spending on Peruvian telecommunications and infrastructure as well, Margaret Meyers, director of the China and Latin America program at think tank Inter-American Dialogue, has said.
China has been financing Latin American growth as a source of capital, with Bank of China-NY (BOC-NY) partnering with the private sector arm of the World Bank last year to increase development in the Americas. Under the memorandum of understanding, BOC-NY will work with the International Finance Corporation (IFC) to provide loans to corporations in the commodities trading sector.
Since 2005, China has provided upwards of $75 billion of loans to Latin American countries, according to a 2012 report from the Global Development and Environment Institute. Latin American countries typically have a harder time securing funds from global capital markets and Chinese loans come with less "policy conditionalities," the report said. Overall, China is providing the region with more funding than those of Western institutions, according to the figures.