Ping An plans to buy Fujian bank ( 2003-11-26 13:51) (China Daily HK Edition)
The Shenzhen-based Ping An Insurance Group of China plans to acquire a small
joint-venture bank in East China's Fujian Province through its trust subsidiary.
"We have made full preparation to acquire Fujian Asian Bank by buying the
shares from the bank's mainland shareholder, we are just waiting for final
approval from the authorities," a senior manager of Ping An was quoted by
Chinese-language newspaper Economic Observer
as saying.
If the regulator approves the acquisition, Ping An Insurance Group - with
some 150 billion yuan (US$18.1 billion) in assets and businesses covering
property insurance, life insurance, trusts, securities and funds - will become
the country's first insurance group providing banking services.
As one of China's first joint-venture banks set up in the early 1990s, Fujian
Asian Bank - with registered assets of US$30 million - was jointly formed by the
Fujian trust consultancy company of Bank of China and Hong Kong BAC Finance Ltd,
both sides taking 50 per cent stakes.
The registered assets of the bank were increased to US$50 million in the
mid-1990s with the ratio of ownership the same. Bank of China absorbed the trust
consultancy company later and became the shareholder of the Fujian bank.
"Bank of China has agreed to sell its 50 per cent stake in the Fujian bank to
us," said the senior manager of Ping An.
Because of strict limits in operation scope and region, joint-venture banks
of China can hardly grow so their Chinese shareholders are eager to retreat,
said banking analysts. But it provides a good opportunity for Ping An to enter
the banking sector.
After more than a decade's operation, Fujian Asian Bank has just one outlet
and employs about 20 staff, making profits by providing foreign exchange-related
service to foreign-funded companies, including loans, deposits and financing
services for import and export, said an official at the bank.
However, the steady performance of the bank and its clear and simple
structure enable Ping An to make the acquisition easily and cheaply, said Liu
Xinming, an analyst at the research department of China Everbright Group.
"It's difficult to acquire big banks in China. For example, at the 11
share-holding commercial banks, acquisitions will be more difficult because of
their shareholders' complicated backgrounds and interests," said Liu.
Ping An is expected to spend at least US$25 million, half of the expanded
registered assets of the bank, to acquire the bank.
The trust subsidiary of Ping An has increased its registered capital to 2.7
billion yuan (US$325.2 million) from 500 million yuan (US$60.2 million) in
October to prepare for the acquisition. According to the regulations issued by
the central bank, the trust company can invest no more than 20 per cent of its
capital into a financial institute.
The Fujian bank will be renamed Ping An Bank after the acquisition, according
to the senior management of Ping An, and will provide credit-card service after
getting approval from the central bank, targeting its life-insurance clients.
Ping An, the country's second-largest life insurer and third-largest non-life
insurer, is expected to list on the Hong Kong stock market in the first quarter
of next year, raising US$2 billion from the initial public offering.
It announced earlier this month that Japan's second-largest life insurer
Dai-ichi Mutual Life Insurance Co had bought a 1 per cent stake in the group,
the fourth foreign strategic investor following HSBC Holdings, Goldman Sachs
Group and Morgan Stanley.
As a result, the foreign investment in the company reached the upper limit of
25 per cent.
