Guangdong Development Bank (廣東發展銀行) is considering selling stakes that could result in overseas investors holding a combined majority share in a Chinese bank for the first time, a bank official said yesterday.
Two different plans are currently being mulled, both of which involve introducing foreign shareholders, said the official who requested anonymity.
Under one plan, the bank would divest some 30 billion yuan (US$3.7 billion) in bad loans to the provincial government of Guangdong Province and bring in both domestic and foreign investors.
The combined holdings of the foreign firms would not exceed the present foreign ownership cap of 25 percent in total, the official said.
However, if the non-performing loans cannot be hived off to the government then the bank will look to foreign investors to take on the debt, thus selling more than half of the lender in the process, the official said.
He did not know when a decision would be made on the restructuring options, which investors would be selected, nor how the bank has priced the stakes.
Six firms, including Chinese insurer China Ping An Insurance Co (
The official said that Morgan Stanley was no longer on the list and that Deutsche Bank was now the deal co-ordinator rather than a potential investor.
DBS is thought to be a frontrunner to take a stake, with China's Sinopec Corp (中國石化) seeking to become the largest single shareholder.
Other media reports have linked Dutch lender ABN Amro and France's Societe General as well as DBS and Deutsche Bank to Guangdong Development Bank.
The official said Guangdong Development Bank would probably sell holdings to three or four companies on the shortlist and transfer the operations of about five branches to each investor as part of the restructure.
Foreign banks face restrictive capital and regulatory requirements in setting up their own branch networks in China, increasing their interest in buying into existing domestic lenders.
Many have lobbied Beijing to up its limits on foreign ownership to allow them a greater say in their management and better protect their investments.
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