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DBS, the Singapore-based lender, is expected to get a 4.1 percent stake of Huaxia Bank, a source close to the top management of Huaxia Bank told China Daily yesterday.
"The discussions on buying a stake in Huaxia Bank have entered a key phase, and the final result will go public before the end of this year," said the insider. "DBS asked for a seat on the board in return."
He also disclosed that Deutsche Bank has reached a fundamental consensus with Huaxia Bank on advisory support and business cooperation. "Deutsche Bank will be one of Huaxia's top three shareholders, if everything runs smoothly," he added
"Huaxia may not have been first choice for Deutsche Bank, but it had few options left," Dong Chen, an analyst with China Securities, told China Daily.
Although the German bank has shown strong interest in China's market, it lost a bid to buy into the Bank of Beijing in March to Dutch rival ING and the World Bank's International Finance Corp.
However, it was chosen to be the financial consultant for Guangdong Development Bank (GDB), also a target for foreign strategic investors.
According to market reports, Deutsche Bank signed an initial agreement with Huaxia Bank last Wednesday, leading to a US$ 330 million purchase of a 14 percent stake of Huaxia Bank.
The German financial giant and another European financial firm would buy 587 million shares in the second smallest of five domestically listed lenders, paying about 4.50 yuan (56 US cents) a share, the sources said.
Reuters reported that the European financial firm turned out to be Sal. Oppenheimjr. & Cie, a leading private bank based in Germany.
If finalized that the deal would mark the European firm's first direct investment into China's banking industry.
Meanwhile, Singapore-based Pangaea Capital Management Co got 6.9 percent of Huaxia shares at the cost of some 1 billion yuan (US$ 123 million) through a public bidding, according to Huaxia's statement on Monday.
If this stake transformation receives the go ahead from the China Banking Regulatory Commission (CBRC), Pangaea will be the fourth largest shareholder of Huaxia.
The Beijing-based lender said in April that it plans to sell a 25 percent stake; and disclosed that it was in talks with BNP Paribas SA, Sumitomo Mitsui Financial Group Inc and DBS Group Holdings Ltd as well as Deutsche Bank and Societe Generale.
As one of the listed joint-stock banks, Huaxia has total assets of 320 billion yuan (US$ 39.5 billion). In the first half, income from its core business topped 6.4 billion yuan (US$ 790 million), up 28.04 percent on a yearly basis.
Net profit rose 19.07 percent, hitting 640 million yuan (US$ 79 million).
(China Daily September 28, 2005)
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