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A consortium made up of Deutsche Bank and Sal Oppenheim jr
& Cie KGaA yesterday signed a binding agreement with
Huaxia Bank to buy a total of 587.2 million shares. This
amounts to a 14 per cent share of the Beijing-based joint
stock bank.
Subject to regulatory approval, the consortium will
purchase the shares from the 18 shareholders of Huaxia Bank
for 272 million Euros (US$329 million).
Deutsche Bank will take 9.9 per cent, while Sal Oppenheim
jr & Cie KGaA will take 4.1 per cent.
After the stake sale, the original first two shareholders
of Huaxia - steel heavyweight Shougang Group and Shandong
Electric Power Corporation - would reduce their shareholdings
to 11.9 per cent and 9.52 per cent respectively.
The consortium will buy Huaxia's shares for 4.42 yuan (55
US cents) each, higher than the bank's closing price of 4.18
yuan (52 US cents) at the Shanghai Stock Exchange yesterday.
Deutsche Bank and Huaxia Bank will also enter into a
wide-ranging co-operation agreement. This will include the
banks' teaming up in such things as credit cards, 'affluent
customer' business, the distribution of investment products
and cash management services.
Deutsche Bank will also provide comprehensive technical
support and assistance to Huaxia Bank in relation to risk
management, retail and corporate banking and governance.
Initially, Deutsche Bank will also be granted one seat on
Huaxia's board.
The co-operation between Huaxia Bank and Deutsche Bank will
deliver exciting opportunities for both and realize
significant mutual benefits, said Liu Haiyan, Chairman of
Huaxia Bank.
Rainer Neske, a member of the group executive committee of
Deutsche Bank, agreed. "At Huaxia Bank, we have a strong and
respected strategic partner in China, which is an important
growth market for Deutsche Bank.
This investment will enable us to participate directly in
the development of China's retail financial services sector.
There is a significant opportunity to leverage our
international retail and financial product expertise into this
exciting market."
Some analysts were not convinced Huaxia was the best choice
for the German bank. But Dong Chen, an analyst with CITIC
Jianyin Securities, said the enterprise had few options left
since most of China's banks had already invited foreign
strategic investors. The analyst also believed that the
investment in Huaxia was too small to satisfy the German
banking heavyweight.
Huaxia said in April that it was planning to sell a 25 per
cent stake. It also disclosed 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.
Established in 1992 with a registration capital of 4.2
billion yuan (US$520 million), Huaxia was listed on Shanghai's
A-share market in 2003. It has branches in 27 Chinese cities
and is focusing on developing business in the economically
developed and resources-rich Yangtze Delta region, the Bohai
region, and economic centres in central and western China.
Its 2005 interim reports show that in the first half of
2005, Huaxia Bank's total assets has reached 323.9 billion
yuan (US$40 billion), with good quality assets, and increased
profitability.
China Daily (2005-10-18)
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