A US investment firm specializing in strategic Asian investment, Newbridge Capital, plans to take a controlling stake in Shenzhen Development Bank. The bank's four largest state shareholders will sell to Newbridge Capital more than 348 million shares, or 17.9 percent of the total, making it largest shareholder if the deal is carried out as planned.
The deal on share transfer is expected to be signed soon, but the amount the US company is paying has not been disclosed.
The China Banking Regulatory Commission (CBRC) recently revised regulations concerning overseas investment in Chinese banks. The limit on shares that a single overseas investor can acquire in a Chinese bank has been lifted to 20 percent from the previous 15 percent.
Operations of a Chinese bank in which overseas investors jointly hold no more than 25 percent of the shares will remain free from limits that are imposed upon foreign banks, according to the new regulations.
Although Shenzhen Development-the nation's first listed bank--is a relatively small operation in terms of capital, it has established an operations network throughout major cities on the mainland. Authorized to operate all banking businesses, analysts believe it has huge expansion potential.
In the first quarter of 2004, Shenzhen Development saw robust growth, raking in a net profit of 214 million yuan (US$25.8 million), or 0.11 yuan (US$0.01) per share.
Newbridge Capital, an active strategic investor with registered capital of US$724 million, has seen other successes with investments in the banking sector. It turned the First Bank of Korea, which had been losing more than US$1 billion annually, into a lucrative operation with a net profit of over US$300 million just a year after it bought 51 percent of the bank’s shares.
Qualified overseas investors are welcome to invest in China's banking sector, CBRC officials said. In addition to capital, technologies and new types of financial services, a benefits brought by overseas investors include advanced operational mechanisms and management. Such concepts and techniques lend offer new operational skills to China's state-owned banks.
Shenzhen Development's four state shareholders are Shenzhen Investment Management, Shenzhen International Trust Investment, Shenzhen Social Insurance and Shenzhen Urban Construction Development (Group).
(Xinhua New Agency June 7, 2004)
