StanChart eyes stake in China bank
(China Daily)
Updated: 2004-05-20 10:47

London-based Standard Chartered Bank said yesterday it hopes to buy a stake in a Chinese bank by the end of the year, joining a domestic partner that intends to restructure and become more international.

Lance Browne, Standard Chartered's China chairman, declined to say which bank might be targeted or how much Standard Chartered would be willing to invest. But when asked by reporters how quickly the bank would act, he said: "I hope to reach an agreement this year."

China is scrambling to recapitalize and modernize its bad-debt laden banks before the sector opens to foreign competition in late 2006 under Beijing's World Trade Organization obligations.

Chinese banks are allowed to sell 25 per cent of their shares to foreign partners, but a single foreign bank can hold a maximum 20 per cent of any one Chinese bank.

"The Chinese side and the foreign side would both like to see the 25 per cent share go to the foreign side," Browne said of the company's initial negotiations.

"Whether the 20 per cent maximum that can go to one foreign investor would go to us is subject to discussion," Browne said, adding that Standard Chartered preferred to buy the full allowable stake.

He said negotiations were ongoing and much depended on what the two sides would do with the stake.

"We don't want to be a passive shareholder. We want to be an active shareholder," he said while attending a financial forum in Beijing.

In January, Standard Chartered was reported to be in talks to buy part of China's Bank of Communications, China's fifth-largest lender.

Bank of Communications has steadfastly denied talk of tie-ups with foreign banks for the past two years, including speculation that HSBC was on the brink of acquiring 15 per cent. But its Chairman Yin Jieyan said in March the bank was looking for foreign strategic partners.

Browne said Standard Chartered had looked at several potential partners in China, but he declined to say whether it was in active discussions with more than one Chinese bank.

"If we are to take 20 per cent, it would seem the Chinese would want another foreign bank to take the other five," he said.

Standard Chartered, which makes about two thirds of its profit in Asia, said previously that it was in talks with various banks on partnerships, which often involve taking a small stake.

Like rivals Citigroup and HSBC Holdings, Standard Chartered is counting on China, which boasts US$1.3 trillion in personal savings, to help drive profit growth. Last year, Citigroup paid US$72.5 million for a 5 per cent stake in Pudong Development Bank. HSBC owns an 8 per cent stake in Bank of Shanghai, acquired in December 2001.

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