BankAm, China Construction Bank agree on equity allocation |
|
|
Published
:
Sat, 18 Jun 2005 09:05
|
BEIJING: It's official now. The China Construction Bank (CCB) has formally said it is allowing Bank of America to take a 9 per cent stake worth $3 billion in the bank. An agreement to this effect was signed here Friday by which Bank of America will initially acquire shares worth $2.5 billion from Central Huijin Investment Co, the largest shareholder in CCB. It will then subscribe to CCB's IPO slated later this year for shares worth $500 million.
The two installments will totally constitute 9 per cent holding, making Bank of America the largest single foreign investor in China's banking sector.
The agreement provides for Bank of America to opt to hike its holding to 19.9 per cent.
| Bank of America's chairman and CEO, Kenneth Lewis, who is in Beijing, said his bank is partnering with the best-positioned bank in China. His bank will provide technology and management knowhow to CCB, said Lewis. It will also be entitled to nominate a director on CCB's board.
Describing the agreement as a win-win situation, CCB Chairman Guo Shuqing said, "The most fundamental and challenging task in transforming CCB is to establish a customer-centric and market-driven culture. We have much to learn from our partner in serving customers and creating shareholder value."
CCB has plans to have three strategic investors. However, Guo did not reveal the identities of the other two. The bank intends to list on the Hong Kong Stock Exchange first and later on the bourses in Shanghai and other cities.
Analysts say the Chinese government had identified CCB as the first financial institution to have an IPO, basically because of its standing and it sheer size. The IPO is a step that is expected to transform the country's banking sector, before it is opened up for competition in 2007. CCB has some 310,000 employees in China, with $472 billion in assets. Even Citigroup, one of the biggest global banks, has about 300,000 employees worldwide, with $1.2 trillion in assets.
Analysts are also of the opinion that CCB is actually the best of the big four state-owned banks, the other three being Bank of China, Industrial & Commercial Bank of China and the Agricultural Bank of China.
|
|
|
|
|
|
Print this Story
