1. Chase’s International Strategy and Objectives
As the largest bank in the United States by assets and market capitalization, JPMorgan Chase is a major provider of financial services with assets of $2 trillion and according to Forbes magazine is the world’s largest public company based on a composite ranking.
Being one of Disney’s top 10 relationship banks, Chase was the third largest bank in the United States with more than $400 billion of assets and $175 billion of loans in 1999, and was a leader in the field of syndicated finance. In 1999, Chase was the lead arranger for 34% of total syndicated loans by dollar volume in the world’s largest market, the United States, ...view middle of the document...
Because we have more people and greater coverage, we are able to do the largest and most difficult deals.”
As the old saying goes “Jack of all trades, master of none”. In this rapid growing global market, there are tons of competitions and challenges Chase has to confront, especially in Hong Kong, such a small but complex market. If Chase were so greedy to cover all the financial fields, its competitors will definitely beat it black and blue. Apart from that, Chase has to distinguish itself with other banks, which makes it a unique investment bank not just a commercial bank simply issues loans. Thus, Chase smartly choose to occupy the leading position specifically in the field of syndicated finance, while remain influential in other areas.
2. Country Risk Evaluation – Hong Kong and China
Chase bank saw many opportunities in regards to the development of Hong Kong Disney. Although there were many risks and costs involved with the large project, they saw the choice of entering into syndication as an opportunity to expand their operations. Chase saw opportunity to not only help advance their syndication status but to help Hong Kong boost their economy due to the recent recession. As a result of the Disneyland Paris downturn in sales, Hong Kong Disney took on the opposite approach, a more conservative capital structure, which along with the government commitment to the project enhanced Chase’s decision to back the project. The government knew that the tourism industry and employment rate needed a boost and to enable Disney to incorporate their hugely successful venture was an opportunity that they knew that had to support. Furthermore, Disneyland Paris was also affected due to the recession but as of the year 2000, the Asian loan market has been showing signs of recovery indicating that it could have been the optimal time to commence the project with prospects looking to increase in the future.
The system of low taxes, unrestricted capital movements, stable Hong Kong dollar, high prosperity and duty free port in Hong Kong certainly posed reasons for Chase bank to bid on the project as they showed signs of future growth in Hong Kong. China is increasingly becoming one of the major business hubs in the world so as a result of Hong Kong joining the Special Administrative Region there is high hopes that Hong Kong will expand in the future with guidance from China.
China is the world’s fastest growing major economy and with this comes threats of constantly changing and developing systems with the unpredictability threat playing a huge role for Hong Kong Disney. However, Chase bank had the largest syndicated lending platform in the Asia Pacific region indicating that they had the capability to manage such an individually large project. This would have given more reassurance to the smaller banks about the success of the project. They also had knowledge and a relationship with the local market which is a huge benefit to...