Bank of America (NYSE:BAC) Seeking Approval to Sell More Products in China

With North America as a growth market largely over, multi-national banks like Bank of America (NYSE:BAC) are targeting emerging markets as their engine of growth, with China being one of the key markets.

Bank of America, while now having a small presence in China, is definitely seeking to expand there, as it is now asking for regulatory approval to offer a variety of products in the Chinese market.

Not only has North America become a mature market for banks, but existing business – from the new rules which are already in place – will struggle to generate profits as they did in the past, and it’s unclear what major overhauls are included once some type of banking legislation gets passed in the United States.

So other than the investment banking side of the business, there isn’t much the banks can count on to generate growth domestically. Even when we finally move out of the recession that will remain true, as America is pretty much a saturated market with banks now trying to steal customers from one another for growth, and maybe coming to market first with a new product, which will be copied soon by their competitors. In other words, banking in America is now a commodity, and there isn’t much to differentiate any longer between the banks.

At this time Bank of America operates in China via an investment in China Construction Bank. It looks like they’re trying to expand beyond that to brand the business their more to their taste and control it better through their new initiative to be allowed to sell more products there. That would also give them more control in how they relate to their Chinese customers, which now they really don’t have much control over.

The current deal with China Construction Bank the targeted sector is retail banking, which gives Bank of America a great opportunity with their commercial and investment banking units to grow in the region. That would make a lot of sense, especially the commercial unit, as China has shown no signs of cooling off, even though the government has signaled they want to at least slow growth down so their domestic economy doesn’t overheat.

Even at the lower levels economic growth in China would remain in the high single digits; still outperforming all other emerging markets, and that doesn’t include the immensity of the size of the population of the company and the large and growing middle class that has capital to spend and businesses ready to cater to them. Those businesses need capital and products, and Bank of America and others will enjoy significant growth if they are given approval to provide them.