China Clears Citigroup Deal
EIJING -- China's banking regulator said it approved the sale of an 85.6% stake in Guangdong Development Bank to a Citigroup Inc.-led consortium for 24.27 billion yuan ($3.1 billion).
The transaction, which gives Citigroup itself 20% of the southern Chinese bank, was completed yesterday, the China Banking Regulatory Commission said in a statement posted on its Web site.
The approval of the stake purchase, which was widely expected after the Citigroup-led consortium signed an agreement Nov. 16 with Guangdong Development Bank, confirms the completion of the year-and-a-half-long bidding war for the Chinese bank.
China Life Insurance Co. now holds a 20% stake in Guangdong Development Bank and International Business Machines Corp. holds a 4.74% stake. The other investors in the consortium are State Grid Corp., with a 20% stake; Citic Trust & Investment Co., with 12.9%; and Yangpu Puhua Investment & Development Co., with 8%.
With the deal completed, the consortium faces the challenge of turning Guangdong Development Bank into a profitable operation.
The bank posted a loss of 150.2 million yuan last year after recording a 62.8 million yuan profit in 2004, according to a stock-exchange filing by China Life. It had 2.74 billion yuan in net assets at the end of June 2006, the statement said.
From: Wall Street Journal, by RICK CAREW
Date: December 19, 2006 Back