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Italy invests in Qingdao City Commercial Bank |
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INTESA Sanpaolo SpA, Italy’s second-largest bank, will pay about 100 million euros (US$136 million) for a 19.9 percent stake in China’s Qingdao City Commercial Bank, to gain a foothold in the world’s fastest-growing major economy.
The companies will sign an agreement July 12, Zhang Guanghong, chairman of Qingdao Bank, said in a telephone interview. Zhang said International Finance Corp, the investment arm of the World Bank, will buy 5 percent of the bank, which is based in the northeastern province of Shandong, Bloomberg reported.
China’s 113 city commercial banks are less competitive than the nation’s bigger banks because they have less capital and are limited to operating in their own regions. Fewer than a third meet a government requirement for a capital adequacy ratio — a measure of financial strength — of at least 8 percent. Selling stakes could help them bolster their finances.
The Chinese government, while committed under a World Trade Organization agreement to open its financial-services industry more to overseas investors, is wary of giving up too much control. The China Banking Regulatory Commission on April 4 rejected Carlyle Group’s application to take a 7.9 percent stake in Chongqing City Commercial Bank, citing the Washington-based buyout firm’s failure to meet unspecified regulations.
Foreign investors seeking stakes in Chinese banks must have at least US$10 billion of assets, two straight years of profits and a capital adequacy ratio of more than 8 percent, according to existing rules. Foreign investors may own a combined 25 percent of a local bank, with any single investor capped at 20 percent.
Intesa’s deal with Qingdao Bank is subject to regulatory approval.
Citigroup Inc, HSBC Holdings Plc and other overseas financial institutions had spent US$19 billion buying stakes in 21 Chinese lenders by the end of 2006.
Intesa seeks to buy as much as 20 percent of Qingdao because it’s a local bank “in a very important area,'’ Chief Executive Officer Corrado Passera said on June 20.
The lender had 15.7 billion yuan (US$2 billion) of assets as of May 2005, according to the State Assets Supervision and Administration Commission of Qingdao.
source: firstarget.com
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