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Shanghai-listed China Minsheng Banking Corp Ltd announced Wday that the United States investment company New Bridge Capital Ltd would acquire 4.82 percent of its shares if it can get approval from China's banking authorities.
In a circular published Wednesday, the bank said its present shareholder, China National Coal Group Corp, had agreed to transfer 175 million legal person shares it holds in the bank to New Bridge Capital.
The transaction was recently approved by Minsheng's board, but has yet to get the green light from the China Banking Regulatory Commission (CBRC).
If things run smoothly, then the US investment company would hold 4.82 percent in Minsheng and become the seventh-largest shareholder.
"The introduction of more foreign capital would be positive news for Minsheng, which is preparing for an H-share listing," said Yang Qingli, an analyst with CITIC Securities.
The International Finance Corporation already held a 1.6 percent stake in Minsheng.
New Bridge Capital had failed in an earlier attempt to buy a 15 percent stake in Shenzhen Development Bank, also a listed bank in China. The deal was already approved by the authorities in September 2002, but was not finally implemented due to disparities during the transition.
The first and only private bank in China, Minsheng is planning for an H-share listing, which will hopefully be realized in the first half of the year, insiders said.
Presently, it is providing financial services to approximately 30 large multinationals, including Coca Cola, McDonald's, Ericsson and Motorola, said Zhang Jinshun, deputy general manager of the Business Department at Minsheng.
Instead of focusing on the volume of financing, it aims to provide financial solutions to these corporate clients to help them lower costs and risks and enhance cash flow, said Zhang.
Innovation is a major driving force for such shareholding banks, which generally report better asset quality and profitability than the big four State-owned banks, which are also restructuring for a public listing, said Yang Qingli with CITIC Securities.
For example, Shenzhen-based China Merchants Bank, with a strong online banking business, posted a 28.6 percent rise year-on-year in net profit to 2.23 billion yuan (US$269.3 million) by the end of 2003. Its non-performing loan ratio was only 3.15 percent then.
But the bank has been calling for equal treatment with the big four and a wider business scope.
They should be allowed to conduct forward exchange services, over-the-counter trade of treasury bonds and gold export and import, Ma Weihua, president of the China Merchants Bank, proposed to the top legislature at the ongoing second session of the 10th National People's Congress (NPC).
The shareholding banks are at a disadvantaged position in terms of scale, network and human resources, said Ma, a NPC delegate.
"We need a regulatory and legal environment that ensures equal treatment and encourages innovation," he said.
The approval procedure for new products should be simplified. And the banks should be able to underwrite, sell and invest in corporate bonds, conduct monetary market fund business and conduct pension management, Ma said.
China now has 11 such national shareholding commercial banks, with total assets of 3.8 trillion yuan (US$458.9 billion) by the end of December, which accounted for 13.8 percent of overall banking assets in the country, sources with CBRC said.
(China Daily March 11, 2004)
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