Overseas firms buy into China bank ( 2003-12-17 17:26) (China Daily by Mei Dong)
Industrial Bank, headquartered in Fuzhou, Fujian Province, which is one of
China's 10 major share-holding commercial banks, has agreed to sell 24.98 per
cent of its stake to three overseas banks.
The bank signed an agreement with Hang Seng Bank, International Finance
Company (IFC) and GIC Special Investment today in Fuzhou, capital of East
China's Fujian Province.
According to the agreement, the three overseas banks will purchase 999
million shares or 24.9 per cent of the Industrial Bank's stake with an
investment of 2.7 billion yuan (US$324.98 million).
The three overseas banks will also beef up co-operation with Industrial Bank
in terms of risk management, financial management and retail business.
But the agreement has yet to be approved by shareholders and the China
Banking Regulatory Commission.
Gao Jianping, chairman of Industrial Bank, said introduction of the three
international financial institutional investors will greatly improve the bank's
corporate governance and business management.
The agreement will play a significant role in increasing the bank's
competitiveness and realizing its strategic goal of becoming a world-class
modern commercial bank, Gao said.
Many players in China's banking industry have been negotiating with potential
overseas investors since China became a member of the World Trade Organization
in December 2001 and promised to open the sector to global giants over five
years.
By introducing overseas financial institutions as equity owners, Chinese
banks are expected to obtain first-class management expertise to help them
survive the mounting competition, said Zhang Liqun, a senior researcher with the
Development Research Centre under the State Council.
The overseas shareholders, in turn, will gain first-hand knowledge of China's
banks, enterprises and the economy, which is crucial for their overseas
operations, Zhang said.
Overseas banks have already speeded up their participation in China's banking
industry during the past several years, he said.
In September 2002 the IFC, the World Bank's private sector financing arm, and
Canada's Bank of Nova Scotia signed a framework deal to invest in the small
Xi'an City Commercial Bank of Northwest China's Shaanxi Province.
Other banks with overseas shareholders holding stakes of up to 15 per cent
include Bank of Shanghai, Nanjing City Commercial Bank and China Everbright
Bank.
The Bank of Communications, China's fifth largest commercial bank, is also
talking with a few overseas financial conglomerates to forge strategic alliance
through a stake transfer.
The central People's Bank of China said foreign investors are now allowed to
take less than 25 per cent of a domestic lender's stake.
