A group led by Citigroup Inc., the US banking giant, won the bid
for more than 85 percent of China's Guangdong Development Bank
(GDB) on Thursday. This ended a extended battle with French bank
Societe Generale and China's second largest insurer Ping An
Group.
The Citigroup consortium and the Guangdong bank signed a deal
worth 24.267 billion yuan (US$3.033 billion) for slightly over 85
percent of GDB shares in Guangzhou at around 8:00 PM Thursday.
The six-institute consortium includes Citigroup, China Life
Insurance Group, the nation's largest insurer and China Guodian
Corp, a major electricity distributor. They'll?? hold 20
percent of GDB shares respectively. The other three institutes will
hold just over 25percent.
In a press release GDB board chairman, Li Ruohong, said the
restructuring would help the bank develop with the participation of
both international and domestic players.?
GDB governor, Zhang Guanghua, said the restructuring was not the
only one playing a part in the reform and opening-up of China's
financial industry.
The bidding for GDB was made public when Citigroup was reported
last year to be seeking a 40 percent stake as part of a consortium
that would take 85 percent of the bank.
On December 28 Citigroup submitted an offer of 24.1 billion yuan
(US$3.01 billion) while Societe Generale bid 23.5 billion yuan
(US$2.94 billion) and Ping An 22.6 billion yuan (US$2.83 billion)
for an 85-percent stake in GDB.
But they had to revise their bids after banking rules issued in
May imposed foreign ownership restrictions.
The GDB was established in 1988 and developed into a national
bank with assets worth of 370 billion yuan (US$46.25 billion) and
more than 12,000 employees. However, by the end of 2003 the bank's
bad loans totaled 35.7 billion yuan This accounted for 18.53
percent of total loans.
William Rhodes, senior vice president of Citigroup, said he was
optimistic about the future of GDB.?
Citigroup, with offices in over 100 countries, last year posted
$2.7 billion in profits from its international consumer
business.?
This year Citigroup has opened 574 bank and consumer-finance
offices. These are mainly fast-growing economies like India. Only
British bank HSBC and GE Capital come close to matching Citigroup's
size.
The GDB deal coincides with changes in the rules governing
foreign banks in China. The country will allow foreign-funded banks
to conduct Renminbi business for Chinese citizens in line with the
country's commitments when entering the World Trade
Organization.
The government would also remove regional restrictions and other
limits on foreign-funded banks giving them the same treatment as
Chinese banks, said Song Dahan, deputy director of the Legislative
Affairs Office of China's State Council, at a press conference on
the new regulations.?
According to the regulations issued Wednesday the Chinese
branches of foreign banks remain banned from engaging in Renminbi
services with Chinese citizens unless an individual, with the
approval of the banking regulatory body, makes a fixed deposit of a
minimum one million yuan (US$125,000).
(Xinhua News Agency November 17, 2006)
