Guangdong bank to auction majority stake earlier 2006

28 November 2005

Guangzhou, China Nov 28 – The auction of Guangdong Development Bank, set to be the first sale of a majority stake in a Chinese bank, will not be completed until the first quarter of 2006 , according with a report published today in the Shenzhen Daily.

The sale of at least 75% of the Guangdong Development Bank will only be done after the local government capitalize the bank.

The three bidders for the Guangdong Development Bank are Citigroup Inc., ABN Amro Holding and Societe Generale SA in joint ventures with Chinese partners.

Citigroup is p lanning to make a joint-venture with a Chinese State-owned company.

ABN Amro is in a consortium with Ping An Insurance (Group) Co. of China Ltd., China´s second-largest life insurer by revenue and Societe Generale is eyeing a tie-up with China Huawen Enterprises Development Corp, an investment company owned by the People´s Daily.

At the moment, the sole Chinese bank with foreign management control is Shenzhen Development Bank, which is 17.89 % owned by Newbridge Capital Inc.

Guangdong Development Bank, founded in 1988, is the 11th largest in China in asset size with 344.5 billion yuan in assets in 2004 and is a major lender in Guangdong Province.

In 2004 HSBC Holdings acquired 19.9 % of Shanghai-based Bank of Communications, with an agreement that its stake could double after 2008 if regulations change.

The Central Government currently limits a single foreign investor to 20 % ownership of a Chinese bank, and total foreign holdings to no more than 25 %. (macauhub)