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 This deal is finally done...Citigroup Wins Bid For GDB |
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dontbesocute
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作者：dontbesocute 在 海归商务 发贴, 来自【海归网】 http://www.haiguinet.com
Citigroup Wins Bid For Guangdong Development Bank
HONG KONG -(Dow Jones)- Guangdong Development Bank Thursday named Citigroup Inc. (C) the preferred bidder to buy a stake and operate the mid-sized lender, after a year-long battle for a share in China's troubled but rapidly growing banking sector, said Robert Morse, chief executive of Citigroup Corporate Investment banking for Asia.
A consortium led by the Wall Street giant will pay US$3.1 billion for an 85.6% stake in GDB, beating Societe Generale SA (13080.FR) of France in the fierce bidding war, according to a statement issued at a signing ceremony in Guangzhou.
The deal, which is still subject to regulatory approval by the China Banking Regulatory Commission, will effectively hand over management of the Chinese lender to the foreign-led consortium, even as China has moved to cap foreign ownership of local banks.
The statement said Citigroup will hold 20% of the bank's shares and its consortium partners will hold the remainder. These include International Business Machines Corp. (IBM), which will take a 4.74% stake, and State Grid Corp. and China Life Insurance Co., which will each hold 20%. CITIC Trust is taking 12.85% and Puhua Investment is taking a 8% stake.
Bill Rhodes, the senior international officer for Citigroup, said the deal marked a very important step for Citigroup in China on an operational level.
Germany's Deutsche Bank AG (DB) acted as financial advisor to GDB.
In what will be the first foreign lender to directly operate a Chinese bank, Citigroup would run the day-to-day operations of GDB and its nationwide network of 501 branches.
Chinese authorities capped foreign ownership of the country's banks at 25% in late 2003, and earlier this year Citigroup failed to obtain waivers to exceed that limit with its initial GDB bid.
Citigroup and other foreign banks are pouring billions of dollars into Chinese banks hoping to cash in on the millions of middle-class consumers looking for credit cards and mortgages. Since 2006, foreign investors have spent US$18.6 billion on minority stakes in Chinese banks, according to capital markets data provider Dealogic.
But foreign investors face a myriad of challenges, including competition from a handful of giant state-owned banks that control the bulk of the banking market. Foreign banks taking stakes in domestic Chinese banks, instead of opening their own branch network, are hoping to tap into this massive customer ba<x>se.
But Citigroup has set its sights on one of the feeblest banks in China, as GDB is weighed down by high levels of non-performing loans and a low capital- adequacy ratio. GDB's CAR was 3.87%, lower than the 8% guidline set by Beijing, and its NPL ratio was 18.32% at end-2003, according to Fitch Ratings.
"So far there is not a formal announcement from the government that it will help to recapitalize and clean up GDB's balance sheet prior to the sale of GDB's stake to the foreign investors consortium," said Kate Lin, banking analyst at Fitch Ratings.
"If the government does not agree to recapitalize the bank prior to the sale, the winning foreign consortium will have to turn around GDB, which was weakly capitalized and had poor asset quality, all by themselves, and this will take them a long time to do so."
Despite GDB's poor financials, Citigroup managed to pull together a string of investors willing to invest in GDB. Blue-chip technology company IBM joined the consortium earlier this week.
The deal also coincides with recent changes in the rules governing foreign banks in China.
China is set to lift limits that prevent foreign banks from providing yuan- denominated services to local clients and allow foreign banks nationwide access starting Dec. 11, according to rules issued by China's cabinet late Wednesday. Under current regulations, foreign banks can handle loans and deposits in foreign currencies, but they can provide yuan-denominated services only to enterprises in 25 cities. The planned change will let overseas lenders offer Chinese consumers products such as mortgages and credit cards.
China will require foreign banks to establish domestic units with a minimum CNY1 billion in registered capital. The locally incorporated foreign banks must also capitalize their branches with CNY100 million.
-By Keri Geiger and Ernest Kong, Dow Jones Newswires; 852-2802-7002; [email protected]
-Edited by David Riordan
(END) Dow Jones Newswires
11-16-060737ET
Copyright (c) 2006 Dow Jones & Company, Inc.
作者：dontbesocute 在 海归商务 发贴, 来自【海归网】 http://www.haiguinet.com
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 This deal is finally done...Citigroup Wins Bid For GDB -- dontbesocute - (4616 Byte) 2006-11-16 周四, 23:10 (1573 reads)
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