MORE acquisitions will occur among listed Chinese banks as the lenders seek expansion, an industry report said yesterday.

Big state-owned lenders, like the Industrial and Commercial Bank of China (stock code: 601398), will seek opportunities to set up overseas branches and merge or acquire overseas lenders in coming years, Ernst & Young said yesterday in the report.

Some big lenders have already taken this path. China Construction Bank bought Bank of America (Asia) Ltd for HK$9.7 billion (US$1.27 billion) as the biggest overseas acquisition inked by Chinese banks. The Beijing-based group got 17 outlets in Hong Kong and Macau through the purchase.

Smaller city commercial banks are in a trend to merge in pursuit of growth, said Terence Lau, an Ernst & Young partner based in Shanghai.

"The priority for the country's 110-plus city commercial banks now goes to seeking strategic partners, listing and stepping out of their headquarter cities," said Lau, who has been in the industry for more than two decades.

"Once they finish the moves, M&A activities will be more active."

Bank of Nanjing and Bank of Ningbo are now awaiting regulatory approvals to become listed in mainland stock markets.

Listed banks in China have a big potential in expanding their intermediary business, which now accounts for less than 10 percent of their total income, said Ann Juay Lim, an Ernst & Young partner.