Standard and Poor's ratings services said on Thursday that its rating of the Industrial and Commercial Bank of China Ltd. (ICBC) was not affected by the lender's plan to acquire a 20 percent stake in a South African bank.
ICBC planned to pay about 5.46 billion US dollars in cash to acquire the stake in Standard Bank Group Ltd. (SBG), South Africa's largest financial services group.
China's largest commercial bank will acquire and subscribe to equal amounts of outstanding ordinary and new shares. The acquisition, which requires shareholder and regulatory approval, should be completed by June 30, 2008.
The impact on ICBC's credit profile is likely to be neutral over the short-to-medium term, said Standard and Poor's.
According to the acquisition plan, ICBC will have no management control over the acquired bank, despite becoming SBG's single largest shareholder. ICBC, however, should benefit because the acquisition will give the bank better access to African markets where its domestic clients are increasingly investing, said Standard and Poor's.
According to the rating organization, ICBC's capitalization will remain in line with the current rating. Its profitability is likely to benefit given the target bank's satisfactory financial performance in recent years.
(Xinhua News Agency November 2, 2007)
