Chinesepod - Citigroup wins bid for stake in Guangdong bank

BIZCHINA / Overseas Investment

Citigroup wins bid for stake in Guangdong bank

(China Daily)
Updated: 2006-11-17 22:49

Citigroup has won an 18-month bidding war among overseas suitors for a
stake in Guangdong Development Bank (GDB), an official with the US
banking giant said yesterday.
The Chinese bank has plumped for Citigroup as the preferred bidder to buy
a stake and operate the mid-sized lender, said Robert Morse, chief
executive of Citigroup Corporate Investment Banking for Asia.

People walk past a Citibank branch in Shanghai yesterday.[Reuters]

A consortium led by Citigroup will pay US$3.06 billion for an 85.6 per
cent stake in GDB, according to a statement issued at a signing ceremony
in Guangzhou, the capital of South China's Guangdong Province.

Citigroup will have a 20 per cent share of the bank, which is owned by
the provincial government, the statement said. This complies with a 25
per cent cap on foreign ownership in the banking sector after taking into
account computer-services behemoth and bid partner IBM's 4.74 per cent
stake.

Citigroup had been competing with a consortium led by Societe Generale SA
of France for control of the 500-branch bank. Citigroup has 13 outlets in
China.

The Guangdong bank now has to apply to the China Banking Regulatory
Commission for permission to have a new shareholder.

Citigroup will appoint a CEO for the Guangdong bank by the time the
transaction is completed, expected by the end of this year, Richard
Stanley, the US bank's head of China, said after the signing ceremony in
Guangzhou.

As part of the bidding group, China Life and State Grid Corp of China
will each own 20 per cent, the statement said. China CITIC Trust &
Investment Co will hold 12.85 per cent and China Puhua Investment will
take 8 per cent.

The Guangdong bank was established in 1988.

(For more biz stories, please visit Industry Updates)

Chinesepod