China Merchants Bank keen on buying into Visa IPO

China Merchants Bank is interested in buying into a planned U.S. initial public offering of shares by Visa Inc, the world's largest credit card network, but any deal would first need Chinese regulatory approvals, its president Ma Weihua said on Monday.

Merchants Bank, China's top credit card issuer, is also looking for major overseas acquisitions in which it could gain a controlling stake but it has no specific targets at the moment, said Qin Xiao, the bank's chairman.

"When we consider an overseas acquisition, we definitely want to buy a controlling stake or even 100 percent of the company," Qin said.

"However, we know that current U.S. regulations allow us to buy no more than a 20 percent stake (of a financial firm)," he added.

Despite U.S. restrictions, the bank is still interested in buying a portion of shares in Visa's proposed IPO, said Ma, in a move that could bolster the company's business ties with Visa and expand its card services in overseas markets.

Last month, Visa said it may raise up to $18.8 billion in the largest U.S. IPO, despite unsteady financial markets and a global credit crunch that could eat into transaction volumes.

"We are already a member of the Visa network ... We want to make a deal that can bring benefits to our bank," said Ma.

"But whether we can do this depends on Chinese regulations, so we have to seek approvals from the regulators first."

ON THE CARDS

Both executives were speaking to reporters on the sidelines of meetings of the Chinese People's Political Consultative Committee, a body that advises the National People's Congress, or parliament, whose annual session opens on Wednesday.

Merchants Bank had issued more than 20 million credit cards by the end of last year, accounting for about one-third of the domestic market.

Among Chinese lenders, Merchants Bank widely receives top marks from analysts for its retail banking services, partly due to its leading position in card services, although cash is still overwhelmingly preferred for most Chinese retail transactions.

Last month, Shanghai Pudong Development Bank a smaller rival, announced plans for a new share issue that aims to raise about 25 billion yuan ($3.52 billion) to boost its capital base and support rapid lending growth.

But Merchants Bank's Qin said: "We have no need to raise new funds unless we want to make big overseas acquisitions."

Ma said China's policy of monetary tightening would definitely have an impact on the entire banking sector, with demand for loans by Chinese enterprises still very high as Beijing seeks to use macroeconomic controls to cool down its potentially overheating economy.

Ma said his bank would have to obey guidelines and quotas for loan issuance set by China's banking regulator, which may slow its loan growth this year.