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General Electric Co agreed to buy a 7 percent stake in China's Shenzhen Development Bank Co., LTD valued at about US$ 100 million, as its consumer finance unit expands in emerging markets, people familiar with the situation said.
Newbridge Capital LLC, which bought 18 percent of Shenzhen in December, manages the bank. The purchase would increase the foreign ownership stake to the 25 percent limit imposed by the Chinese Government.
GE Consumer Finance expects about three quarters of its profit to come from outside the US this year, David Nissen, head of the business, told investors in July. Earnings at the business are expected by GE to climb 20 percent in 2005, faster than the Fairfield Connecticut-based conglomerate as a whole.
Newbridge spokesman Owen Blicksilver and GE spokesman Russell Wilkerson declined to comment.
The GE purchase was reported earlier on Wednesday by the Wall Street Journal, which cited unnamed people.
Frank Newman, chairman of Newbridge, became the first foreigner to lead a commercial bank in May. The investment firm bought its Shenzhen stake from four government-controlled shareholders for US$ 149 million in December, after more than two years of talks.
San Francisco-based Newbridge's stake is the biggest of any single shareholder, giving the firm the right to appoint the chairman and top managers of the bank, based in the city of Shenzhen across the border from Hong Kong.
General Electric, the world's biggest issuer of private-label credit cards, buys stakes in or purchases banks or finance companies, helped by the lower borrowing costs because of GE's AAA credit rating, the highest available.
(China Daily September 30, 2005)
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