ING Group signed an agreement with Bank of Beijing on Friday in
Beijing to purchase a 19.9 per cent stake in the bank, making a
substantial move to expand its commercial banking business in
China.
The International Finance Corporation (IFC) is also seeking
approval from its board to take a 5 per cent stake in the
Beijing-based lender, while the previously reported investment
intention of Deutsche Bank is obviously over.
According to agreements signed on Friday, ING will spend 1.78
billion yuan (US$215 million) to acquire the stake in Bank of
Beijing.
That, in addition to the proposed 5 per cent stake purchase by
IFC, will take the total foreign shareholding to 24.9 per cent,
which temporarily excludes the possibility of other foreign
investment in the bank.
China sets an upper limit of 20 per cent for the stake a single
foreign investor can hold in a domestic bank and 25 per cent for
all foreign shareholdings in the bank.
"China's banking industry is close to a full opening up," said
Yan Xiaoyan, president of Bank of Beijing, at the signing ceremony
on Friday in Beijing. "As a Chinese bank, our target is to explore
the international market and become an internationally competitive
bank."
Yan said that apart from foreign capital, the bank will also
introduce advanced technology and expertise from its foreign
partners to upgrade its management and operating system.
Alexander Rinnooy Kan, chairman of Asia-Pacific and Member of
the Executive Board for ING Group, said the investment is a major
milestone in ING's business expansion in the commercial banking
sector in China.
It will provide its own financial expertise, especially that of
corporate governance and risk management to the Chinese partner,
which will also offer it a new platform to serve Chinese
clients.
ING believes in the development potential of Bank of Beijing and
hopes to help it become a "world-class bank," he said.
Bank of Beijing was originally named Beijing City Commercial
Bank, founded in 1996. It is one of the 100 or so city-level
commercial banks in China.
But the bank was renamed in January, when it first revealed the
plan to introduce foreign strategic investment and seek a public
listing to support business expansion. Deutsche Bank was also one
of the reported potential investors in the bank at the time, but it
finally withdrew from the negotiation.
Bank of Beijing now has 117 branches across China. Its total
assets reached 209 billion yuan (US$25.2 billion) by the end of
2004, nearly 10 times its size nine years ago.
After the foreign capital injection, the bank's total
shareholders' equity will reach 10.1 billion yuan (US$1.2
billion).
"China's banks are facing many challenges," said Karin
Finkelston, IFC's associate director, on Friday at the signing
ceremony.
But some of them will become competitive in the international
markets, she added. Meantime they will also offer China's private
businesses more financial support.
IFC has been an active investor in China's small and
medium-sized banks, with investments in Bank of Shanghai, Nanjing
City Commercial Bank, Xi'an City Commercial Bank, Industrial Bank
and China Minsheng Banking Corp Ltd.
(China Daily March 27, 2005)