Temasek Holdings Pte, the Singapore Government's investment holding company, is in talks to increase its stake in China Minsheng Banking Corp.

 

An increase in Temasek's stake would strengthen the holdings company's position as the biggest overseas investor in China's banks.

 

"We haven't yet short-listed investors, but Temasek is among those who have shown strong interest," said He Qun, a director at Minsheng Bank's board office, yesterday.

 

The Beijing-based lender said last week it plans to sell 3.5 billion new shares in a private placement to no more than 10 institutional investors later this year to replenish capital.

 

Temasek, a US$65 billion Singapore government fund, in January 2005 bought a 4.55 percent stake in Minsheng Bank, later diluted to 3.9 percent, according to exchange filings. The company can increase its holding to a fifth, as Chinese rules allow overseas ownership of at most 25 percent of a bank, with a single investor limited to 20 percent.

 

Overseas financial institutions are jostling to boost their presence in a banking market where loan growth has averaged 14.5 percent a year between 2000 and 2005. US and European lenders including Citigroup Inc and HSBC Holdings Plc have spent more than US$16 billion in the past two years buying into local banks.

 

Temasek agreed to buy most of the new shares to be issued by Minsheng Bank, which would make it the biggest shareholder of China's only privately controlled lender, the Economic Observer reported over the weekend.

 

The Singapore-based company is now the seventh-largest holder of Minsheng shares.

 

Temasek won't comment on market rumours, Singapore-based spokesman Mark Lee said yesterday.

 

The company has been in talks to raise its stake, Minsheng Bank President Dong Wenbiao said in March.

 

(China Daily July 25, 2006)