|
Citigroup to raise stake in Shanghai Bank
(AP)
Updated: 2005-12-28 09:51
U.S. financial services giant Citigroup Inc. said Tuesday it plans to
increase its stake in China's Shanghai Pudong Development Bank to 19.9 percent,
the maximum legal holding for a single foreign bank in a local lender.
New York-based Citigroup had earlier said it planned to expand its
investments in China, including its 4.62 percent stake in the mid-sized Shanghai
bank.
Pudong Development Bank announced the agreement in a statement to the
Shanghai Stock Exchange. It gave no financial details, but said the two banks
recently signed an amendment to their earlier "strategic partnership" pact,
calling for Citigroup to exercise its option to boost its stake to 19.9 percent.
Citigroup's Shanghai spokeswoman Marine Mao confirmed the announcement
Tuesday, but said the bank had no comment and would disclose no details.
Citigroup's New York spokeswoman Shannon Bell confirmed that Citigroup was
increasing its ownership share to 19.9 percent, but declined to give other
details.
Many foreign banks are boosting investments in China ahead of the full
opening of its fast-growing banking market to foreign competition in late 2006.
Regulations now limit a single foreign investor's ownership to less than 20
percent, and combined foreign investment to 25 percent.
Citigroup paid 600 million yuan ($72 million at the time) in early 2003 for a
5 percent stake in the Shanghai bank, whose nine other top shareholders are
controlled by the city government. A share issue later diluted it to 4.62
percent.
The two banks launched a joint credit card in early 2004, part of the U.S.
bank's effort to tap China's fast-developing consumer credit market. The Chinese
bank handles all transactions, and Citigroup provides technological and
managerial advice.
Citigroup is also reportedly leading a bid with state-owned commodities giant
China National Cereals, Oils & Foodstuffs Corp. for a substantial stake in
state-owned lender Guangdong Development Bank, a mid-sized lender based in the
affluent southern province of Guangdong, near Hong Kong.
The Guangdong bank's relatively large load of bad debts and urgent need for
funds have prompted regulators to offer foreign investors a majority stake,
relaxing the usual limits, state media reports have said.
Meanwhile, staff at Singapore's state-owned Temasek Holdings Pte. Ltd.
declined comment on reports it will pay $1.5 billion (euro1.26 billion) for a 5
percent stake in Bank of China, the country's second-biggest lender.
Chinese financial magazine Caijing said Bank of China's largest shareholder _
state-owned asset management company Central Huijin Investment Co. had signed
off on the deal after months of discussion.
Temasek's earlier offer, made in August, had been $3.1 billion (euro2.61
billion) for a 10 percent stake.
Hong Kong's South China Morning Post newspaper said Temasek also agreed to
subscribe to another $500 million (euro421.6 million) worth of shares when Bank
of China launches its initial public offering, expected early next year. It said
China's State Council, or Cabinet, had approved the plan.
Bank of China spokesman Wang Zhaowen refused comment Tuesday.
Foreign banks are
eager to buy into China's potentially lucrative market, despite the industry's legacy of bad loans
and mismanagement. Chinese regulators hope foreign institutions will improve local banks' management
and competitiveness.
|
