While a significant number of western
financial groups, including American Express and Bank of America,
have now sold stakes in Chinese banks over the past month,
Malaysia’s CIMB Group has completed a deal to buy 19.99 percent
stake in CNY18 billion-asset regional lender Bank of Yingkou.
Douglas
Blakey reports.

Malaysia’s second-largest bank by assets, CIMB Group, has confirmed
plans to expand its China business remain on track, following
completion last month of its deal to acquire a 19.99 percent stake
in Bank of Yingkou (BofY) for CNY348.8 million ($51 million).

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As at 31 December 2008, BofY had CNY18.3
billion in total assets and its profit before tax for the financial
year was CNY305.5 million.

While it did not capture as many headlines as
CIMB’s two major 2008 deals (Bank Niaga in Indonesia and BankThai
in Thailand helped CIMB become southeast Asia’s largest retail bank
by branches with 1,150 units, according to the group), taking a
stake in the Yingkou-based regional lender fulfilled a long-held
ambition of CIMB to enter the Chinese market.

CIMB Group’s CEO, Nazir Razak, told
RBI: “We believe that, as a regional universal banking
franchise, it is imperative that we are plugged into China as it is
obviously going to be a key driver of the global and ASEAN
economies in the future. We evaluated Bank of Yingkou’s franchise
and its management team, and from both perspectives, we think that
this is the right vehicle for us.

“Crucially, Bank of Yingkou had, in January
2008, received approval from the China Banking Regulatory
Commission to operate as a regional bank, paving its way for its
expansion into other parts of China.”

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By contrast, the list of Western-based banking
groups cashing in Chinese-based chips to boost balance sheets, a
trend kicked off by Royal Bank of Scotland and UBS selling their
respective 4.3 percent and 1.3 percent stakes in Bank of China last
year, continues to grow.

In the last month alone, German insurer
Allianz and US card giant American Express sold 3.22 billion and
638 million shares, respectively, in Industrial & Commercial
Bank of China for an undisclosed sum, at the first opportunity
following expiry of a lock-up period.

Those deals were, however, dwarfed by Bank of
America’s $7.3 billion sale of a 6 percent stake in China
Construction Bank, its need to raise capital evident by BofA
agreeing a 14 percent discount on the transaction.

The Chinese lender’s Yingkou base, in the
north east of the country, is one of the fastest growing regions in
China, while Shenyang, the provincial capital of Liaoning province,
has ambitions to be a centre for Islamic finance in China.

Bumiputra-Commerce Holdings, which owns CIMB,
reported a 14.8 percent year-on-year growth in first quarter net
profit to MYR614 million on 15 May.

Profit before tax at the group’s Malaysian
consumer bank increased by 119 percent. Mortgages, credit cards and
the group’s micro credit lending grew by 24.2 percent, 9.9 percent
and 96.3 percent, respectively.

Razak added: “In the longer term, we hope that
Bank of Yingkou will graduate to become a national bank. This will
ties in well with our regional strategy and will further enhance
our value proposition to our customers – we already have operations
in Hong Kong and a representative office in Shanghai with
China-based customers.

“We have been successful in exporting our
credit cards business model to Indonesia, and we hope to be able to
assist Bank of Yingkou in this area, which they have yet to
develop.”

 

RBI
DealWatch

RBI DealWatch tracks
global financial services mergers and acquisitions, privatisations
and demutualisations, flotations, divestments, share stakes,
strategic alliances and joint ventures

Country

Participants

Type/value

Description

Date

EUROPE, MIDDLE EAST,
AFRICA

UK

Barclays

Possible sale of iShare funds business

Barclays has received fresh interest from
both trade and private equity buyers for its iShares funds
business, which it agreed to sell in April to private equity firm
CVC for £3 billion ($4.6 billion). In terms of the deal, Barclays
can seek a higher sale price by mid June while CVC has the right of
first refusal to match any higher offer.

11 May

Belgium, Luxembourg

BNP Paribas, Fortis

Acquisition update

Rebel shareholders of Fortis have lodged a
complaint with the European Commission in a bid to block the
ongoing sale of assets to BNP Paribas.

11 May

Germany, UK

Commerzbank, Kleinwort Benson

Divestiture

Commerzbank has been ordered to dispose of
UK-based private bank Kleinwort Benson as a condition of taking
€18.2 billion ($24.8 billion) of state aid from the German
government.

8 May

Spain, Austria, Global

Criteria Caixacorp, la Caixa, Erste Group,
Bank of East Asia

Increased stakes

Criteria Caixacorp plans to raise its stake
in Austria’s Erste Group to over 10 percent this year, the holding
company owned by Spain’s largest savings bank, la Caixa, has said.
The move is part of a company strategy of boosting its stakes in
some of its affiliates. The company also plans to increase its
stake in Hong Kong’s Bank of East Asia to over 10 percent.

7 May

Uganda

Bank PHB, Orient Bank

Acquisition

Nigeria’s Bank PHB has acquired an 80 percent
stake in Uganda’s Orient Bank for $62 million. According to Orient,
the deal will accelerate its retail banking expansion plans.

4 May

Spain

Royal Bank of Scotland, Linea Directa
Aseguradora, Bankinter

Sale of insurance unit stake

Royal Bank of Scotland has sold its 50
percent stake in Spanish insurer Linea Directa Aseguradora to joint
venture partner Bankinter for €426 million, a consideration of
around 2.5x the insurer’s tangible book value.

30 April

Country

Participants

Type/value

Description

Date

UK

Northern Rock

Possible privatisation

The UK government is mulling a deal to sell
off failed bank Northern Rock by the end of the year, according to
UK press reports.

27 April

THE AMERICAS

US

Temasek, Bank of America

Stake sale

Temasek, the Singapore state investment
company, has revealed that it sold its entire stake in Bank of
America during the first quarter of 2009, earning it an estimated
$3 billion loss in the process. The fund said it was now looking to
refocus on emerging markets.

15 May

US

PrivateBancorp

Capital raising

Chicago-based PrivateBancorp is to raise
around $180 million in capital to boost its expansion plans. Last
year, the bank doubled in size with total assets reaching $10
billion.

12 May

US

BB&T, US Bank, Capital One

Capital raising

Three of the nine US banks of the 19
stress-tested by the US government (see News Digest) found
not to require more capital are to raise more than $7.5 billion
between to repay federal funds. In the largest issue, Capital One
said it would raise $3.55 billion while US Bank and BB&T said
they would sell $2.5 billion and $1.5 billion in common stock to
help repay TARP funds.

11 May

US

Bank of America, Wells Fargo

Capital raising

Having been told to raise $33.9 billion in
extra capital as a result of the US Treasury’s stress-testing
initiative, Bank of America filed a registration document with the
Securities and Exchange Commission to sell up to 1.25 billion
shares, worth around $17.7 billion, based on a share price of
$14.18. Rival Wells Fargo, ordered to find $13.7 billion, raised
$7.5 billion as a first instalment following the issue of new
shares at $22 each, a discount of around 10 percent.

8 May

US

E*Trade

Capital raising

Online brokerage E*Trade plans to sell up to
$150 million of common stock in an effort to raise capital to
satisfy regulators.

8 May

US

AIG

Sale of asset management unit

Failed US insurer AIG’s asset management
unit, which has $100 billion under management, has moved a step
closer towards a sale. Reports suggest a number of firms are eyeing
up a possible deal, including Australian-based Macquarie.

7 May

US

BankUnited

Possible acquisition

The largest bank headquartered in Florida –
80-branch, $14.3 billion-asset BankUnited – has until mid May to
merge or find a buyer to shore up its balance sheet. The troubled
bank, which has said its equity has been wiped out, has delayed
reporting its fiscal 2008 results.

7 May

US

Capitol Bancorp, Yuma Community Bank,
Foothills Bank

Acquisition

Capitol Bancorp has agreed to sell Yuma
Community Bank to The Foothills Bank, an Arizona-based community
bank, for around $10.5 million in cash.

5 May

Brazil

Bank of America, Banco Itaú Unibanco

Possible stake sale

Bank of America is being linked with a sale
of its stake in Latin America’s largest bank by assets, Banco Itaú
Unibanco, as part of its capital raising exercise. Its stake – 2.47
percent of voting shares and 8.26 percent of preference shares – is
worth around $3.3 billion.

5 May

US

Silverton Bank

Bank failure

Silverton Bank, the 30th and largest US bank
to fail this year and the sixth in the state of Georgia, will cost
the FDIC insurance fund around $1.3 billion. Silverton Bank had
1,400 client banks in 44 states, with $4.1 billion in assets and
$3.3 billion in deposits.

1 May

ASIA-PACIFIC

China

Bank of America, China Construction Bank,
Temasek

Stake reduction

Bank of America has sold 13.5 billion shares
for HK$4.20 ($0.54) apiece in China Construction Bank (CCB) in a
deal worth around $7.3 billion, representing 6 percent of CCB’s
outstanding stock. BofA retains 25.6 billion shares in CCB, a 10.6
percent stake, that cannot be sold before August 2011. Purchasers
of the shares include Singapore’s state investment agency Temasek,
adding to its existing 5.65 percent stake in CCB.

12 May

India

DBS, HDFC Bank

Stake sale

Singapore’s DBS Group has sold its 2.7
percent stake in India’s HDFC Bank for about $260 million,
according to Reuters. A DBS spokesperson told the wire that the
bank had dropped its holding “as we believe this is an opportune
time to divest the shares”. HDFC Bank was the best performing
retail bank in India in terms of profit growth for fiscal 2008,
according to RBI figures (see country survey,
RBI 611, and State Bank of India steams ahead).
Citigroup owns around 11 percent of HDFC.

11 May

Japan

Shinsei Bank, Aozora Bank

Merger update

On-off merger talks between Shinsei Bank,
nearly a third-owned by US private equity giant JC Flowers, and
Aozora Bank, more than 50 percent owned by Cerberus, are reportedly
back on, according to a report in the Nikkei Business Daily. It
said the banks plan to set up a holding firm in 2010 and merge a
year later to form the country’s sixth-largest bank.

11 May

Japan

Citi, Nikko Cordial Securities, Sumitomo
Mitsui

Sale of securities unit

Sumitomo Mitsui Financial Group has agreed to
buy Citi’s Nikko Cordial brokerage in a deal worth over $5 billion.
Cordial – Japan’s third-biggest brokerage after Nomura and Daiwa
Securities – had also attracted interest from Mitsubishi UFJ
Financial Group and Mizuho Financial, Japan’s third biggest bank by
market cap.

1 May

Indonesia

Bank Central Asia, Bank UIB

Strategy update

Indonesia’s Bank Central Asia is to convert
Bank UIB, which it acquired for $22 million in November 2008, into
an Islamic bank.

30 April

China

Industrial & Commercial Bank of China,
Allianz, American Express

Stake reductions

Allianz and American Express have sold 3.22
billion and 638 million shares, respectively, in Industrial &
Commercial Bank of China for an undisclosed sum after their lock-up
periods expired. Following the deal, Allianz and Amercian Express
hold 0.97 percent and 0.2 percent, respectively, in China’s largest
bank.

27 April

South Korea

BNP Paribas, Shinhan Financial Group

Stake increase

Shinhan Financial Group has agreed to sell
part of a controlling stake in its life insurance unit to BNP
Paribas. Shinhan will be left with about a 15 percent stake in the
insurer. Financial terms of the deal were not disclosed.

24 April

CIMB

CIMB, Bank of Yingkou

Stake acquisition

Malaysia’s CIMB Group has become the single
largest shareholder of regional Chinese lender Bank of Yingkou.

21 April

Source: RBI