Industrial & Commercial Bank of China

The Vancouver Sun is on a roll today. They have another post on ICBC that makes for interesting reading. Frankly, I don’t know what to make of it. But it makes for a good read.

Chinese bank has market cap twice that of JPMorgan

First, the article starts off stating that the head of ICBC makes only 1% of what Jamie Dimon over at JP Morgan Chase makes. Then it points out that ICBC has a market capitalization that makes it the largest bank in the world, twice the the market cap of JP Morgan Chase.

Not many heads of global banks earn less than Jiang Jianqing, chairman of Industrial & Commercial Bank of China Ltd. Jiang’s $260,000 salary last year was less than 1 percent of the $27.8 million JPMorgan Chase & Co. paid Jamie Dimon.

Jiang has been making plenty of money for ICBC shareholders. ICBC’s stock price is up about 80 percent from its $22 billion initial public offering in October 2006 — the world’s largest — to $5.53 Hong Kong (71 cents) on June 25. The bank’s market capitalization of $252 U.S. billion is almost twice that of JPMorgan, making ICBC the largest publicly traded financial institution on the planet.

In the meantime, Chinese equities are imploding and the crack-up boom is underway in Asia. Here in the West. banks are drowning in bad debt and credit writedowns. Is none of this going to hit ICBC? I think Mark Faber’s quote near the end sums it u the best.

Bad debts could be another challenge, says Marc Faber, who manages $300 million at Marc Faber Ltd. in Hong Kong and doesn’t own ICBC shares. “If you are the largest bank in China, it’s impossible to know what every one of the bank lending officers is doing,” Faber says. “If Citibank and UBS don’t know, what hope has ICBC?”

When the Olympics are over, watch what the Chinese do. Caveat emptor.

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