Accessibility links

Breaking News

Merrill Lynch Says Foreign Banks Will Not Have Big Impact on China's Banking Sector

China has opened up its banking sector to foreign competition and Qantas Airways has accepted one of the biggest takeover offers in Australia's corporate history. Claudia Blume at VOA's Asia News Center has more on these and other business stories from the region.

Australia's flag carrier Qantas has agreed to an $8.7 billion takeover bid from an international private equity consortium. Australia's biggest investment bank, Macquarie, and a U.S. private equity firm, Texas Pacific Group, lead the consortium.

The Qantas board accepted an improved offer of $4.40 a share after rejecting an initial offer of $4.30.

The deal has been structured to comply with Australian rules, which limit foreign ownership of Qantas to 49 percent.

Five years after joining the World Trade Organization, China opened up its retail banking market to foreign competition last week. Chinese customers can now open accounts in the local currency, the yuan, in local branches of foreign banks.

Foreign banks and trade officials from the United States and other countries have pushed for this change for several years. Foreign banks had primarily been restricted to doing commercial business in foreign currencies in China.

But Merrill Lynch Asia banking analyst Alistair Scarff says foreign banks are unlikely to become dominant players in China's banking market. Instead, he says, they will likely focus on niche markets.

"I don't think for a second that foreigners will be able to take a significant market share." he said. "It will be very product-focused and industry-focused where they will have a presence."

Scarff says customers will continue to favor local banks because of their extensive branch networks.

Australia and Japan have agreed to begin formal talks on a free trade agreement early next year. Japan is Australia's largest trading partner, with two-way trade valued at over $38 billion a year. The sensitive topic of Tokyo's high import duties on agricultural commodities will be part of the negotiations.

While some people own mobile phones simply to make or receive calls, for others they are the ultimate fashion accessory. Targeting this group, Korea's LG Electronics has teamed up with Italian luxury goods designer Prada to produce designer mobile phones. The phones, featuring a touch interface that replaces the conventional keypad, will be launched in Europe next year, and available soon after in a number of Asian locations, including Hong Kong, Taiwan and Singapore.