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Citigroup-Led Group Wins China Bank Bid

16th Nov 2006, 17:11 GMT

An investment group led by Citigroup Inc., the biggest U.S. financial institution, has won a yearlong bidding war by overseas suitors with a $3.1 billion offer for a stake in China's Guangdong Development Bank, a Citigroup official said Thursday. Guangdong Development Bank named the Citigroup consortium the preferred bidder to buy the stake and operate the mid-sized lender, said Robert Morse, chief executive of Citigroup Corporate Investment banking for Asia. A consortium led by the U.S. banking giant will pay $3.1 billion for an 85.6 percent stake in Guangdong Development Bank, according to a statement issued at a signing ceremony in Guangzhou, the capital of Guangdong province. Citigroup itself will have a 20 percent share of the bank, which is owned by the provincial government, the statement said. This complies with a 25 percent cap on foreign ownership in the banking sector. Its partners in the bidding group include several Chinese companies. Citigroup had been competing with a consortium led by Societe Generale SA of France for control of the 500-branch bank. The group now has to apply with the China Banking Regulatory Commission for permission to have a new shareholder. As Beijing gradually opens the banking industry to foreign competition, Chinese banks have sought out international lenders as strategic investors to draw in both money and management skills. Bidding for the Guangdong bank had been unusually heated because a takeover would offer a rare opportunity for a foreign investor to win management control of a mid-size Chinese bank. But the idea of a foreign-led consortium taking majority control of a Chinese bank is controversial.

View full story at business.newsfactor.com

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