UCBH to Buys Shanghai-Based Bank for $205 Million
By Jonathan Stempel
NEW YORK, March 27 (Reuters) - UCBH Holdings Inc.(UCBH.O: Quote, Profile , Research), the largest bank that specializes in serving Chinese-Americans, said on Tuesday it will buy Shanghai's Business Development Bank Ltd. for $205 million in cash to offer services to customers who do business in China.
Privately held BDB was established in 1992 as China's first wholly foreign-owned bank. China's economy grew 10.7 percent last year, and is the world's fourth-largest.
UCBH, the San Francisco-based parent of United Commercial Bank, becomes the first U.S. community bank to buy a Chinese-based bank, according to Friedman, Billings, Ramsey & Co. analyst James Abbott.
"This is a landmark acquisition," Abbott wrote. "With a full banking license in mainland China, UCBH can ... accelerate the growth of the trade finance portfolio and drive earnings per share higher." Abbott rates UCBH "outperform."
BDB has $217.2 million of assets, $188 million of loans and $25.5 million of deposits, and is licensed to conduct foreign currency business with non-Chinese companies and individuals. It also has offices in Beijing, Guangzhou and Shantou.
UCBH Chief Executive Thomas Wu said the purchase should save his company at least four to five years in achieving its expansion plans in China. The company plans to add two or three more branches there within three years, he said "This announcement came sooner than expected and we think it is a significant step toward its transition into a trade-focused Chinese-American corporation," wrote Lehman Brothers Inc. analyst Andrea Jao. She rates UCBH "overweight."
UCBH has $10.35 billion of assets, 50 banking offices in California; banking offices in New York, Atlanta, New England, the Pacific Northwest, Houston and Hong Kong; and offices in Shanghai, Shenzhen and Taipei. It agreed in January to buy New York's Chinese American Bank for $130.7 million.
BDB would become a unit of United Commercial Bank and take the latter's brand name. The transaction is expected to close in the fourth quarter, pending U.S. and Chinese regulatory approvals. UCBH expects the transaction to marginally lower earnings per share in 2008, and increase it thereafter.
Germany's Deutsche Bank AG (DBKGn.DE: Quote, Profile , Research) on Monday said it applied with Chinese regulators to incorporate locally in the country. Bank of East Asia Ltd. (0023.HK: Quote, Profile , Research), Citigroup Inc. (C.N: Quote, Profile , Research), HSBC Holdings Plc (HSBA.L: Quote, Profile , Research)(0005.HK: Quote, Profile , Research)(HBC.N: Quote, Profile , Research) and Standard Chartered Plc (2888.HK: Quote, Profile , Research) (STAN.L: Quote, Profile , Research) won approvals last week.
Shares of UCBH rose 16 cents to $18.75 in afternoon trading on the Nasdaq. (Additional reporting by Michael Flaherty)
Wednesday, March 28, 2007
Wednesday, November 22, 2006
Bank Deals in Emerging Markets
Bank Deals in Emerging Markets
Citigroup to manage Guangdong bank after $3.1 billion deal
By David Barboza / The New York Times
Published: November 16, 2006
SHANGHAI: A group of investors led by Citigroup agreed Thursday to pay about $3.1 billion to acquire a controlling stake in Guangdong Development Bank, the first time a foreign-led consortium has won the right to manage a major Chinese bank.
The deal came after more than a year of intense negotiation with the Chinese government and a contentious bidding war between investors led by Citigroup and a competing group led by Société Générale, the French bank.
The agreement gives Citigroup, one of the world's biggest financial institutions, a foothold in the world's fastest- growing major economy.
While Citigroup is only purchasing about 20 percent of the Guangdong bank, it is teaming up with International Business Machines and a group of powerful Chinese state-owned companies to take control of 85.6 percent of the ailing midsize lender, which is expected to undergo massive restructuring.
IBM, the computer services company, is one of the smaller members of the consortium and has agreed to acquire a 4.7 percent stake.
Citigroup, the only investor with banking experience, is expected to assume significant management control over the bank, which has 500 outlets, more than 12,000 employees and $48 billion in assets.
William Rhodes, chairman and chief executive of Citibank, the consumer and corporate banking arm of Citigroup, issued a statement saying, "The continued emergence of China's economy represents a tremendous opportunity for Citigroup."
The announcement caps a second consecutive year of feverish investment in China's state-owned banks by some of the world's biggest financial institutions.
Despite widespread concerns about weak risk management controls and bad loans in the Chinese banking system, global financial giants like Bank of America, HSBC, Goldman Sachs, UBS and the Royal Bank of Scotland have lined up to acquire multibillion-dollar minority stakes in China's biggest banks.
Many companies are betting on China, where the economy has been growing at a blistering pace, bank lending is skyrocketing and share prices are soaring.
The deal was announced less than a month before China was scheduled to open the country's banking sector to foreign investors as part of its commitment to the World Trade Organization.
But rather than rushing into China to set up their own branch outlets, foreign banks have been scrambling to take minority stakes in the country's troubled, but potentially lucrative, state- owned banks.
The Chinese government has encouraged investment in the banks but has been reluctant to allow foreign corporations to own majority stakes, typically limiting foreign companies to owning no more than a combined 25 percent.
One of the few major banks on the sidelines of this massive investment influx has been Citigroup, which had been looking for a way of getting into China with its own brand and management control.
Now, Citigroup is hoping to build a platform here - a foundation that could help the huge global financial institution bolster its revenue and earnings outside the United States.
In announcing the deal Thursday, Citigroup said it would acquire about a fifth of a bank that sits in one of the richest regions of China but has long been troubled by mismanagement and bad loans.
Another group of investors led by Citigroup nearly completed a deal to acquire a majority stake in Guangdong Development Bank last December. But after strong criticism of foreign involvement in the country's banking sector from some Chinese political figures, the government apparently decided to cap individual ownership of Guangdong at the standard 25 percent.
So Citigroup resubmitted its bid for the bank with two other Chinese companies, the State Grid, an electric utility, and China Life, a state-run insurance company, both of which are expected to acquire 20 percent stakes. Two other Chinese firms will also acquire a sizable stake. And IBM agreed to purchase just under 5 percent as part of the consortium.
Citigroup also owns a minority stake in another Chinese bank, the Pudong Development Bank, and it has the option of acquiring up to 19.9 percent of that lender, based in Shanghai.
The Guangdong Development Bank announcement comes just two weeks after another Chinese state-owned bank, the Industrial & Commercial Bank of China, raised more than $21 billion in the biggest public stock offering in history.
Two other Chinese state-owned banks, China Construction Bank and the Bank of China, have also gone public in the past 14 months with huge stock offerings. After the offerings, companies like Bank of America and Goldman Sachs have seen the value of their shares in those Chinese banks grow by billions of dollars.
The deal still depends on the approval of the China Banking Regulatory Commission.
Citigroup to manage Guangdong bank after $3.1 billion deal
By David Barboza / The New York Times
Published: November 16, 2006
SHANGHAI: A group of investors led by Citigroup agreed Thursday to pay about $3.1 billion to acquire a controlling stake in Guangdong Development Bank, the first time a foreign-led consortium has won the right to manage a major Chinese bank.
The deal came after more than a year of intense negotiation with the Chinese government and a contentious bidding war between investors led by Citigroup and a competing group led by Société Générale, the French bank.
The agreement gives Citigroup, one of the world's biggest financial institutions, a foothold in the world's fastest- growing major economy.
While Citigroup is only purchasing about 20 percent of the Guangdong bank, it is teaming up with International Business Machines and a group of powerful Chinese state-owned companies to take control of 85.6 percent of the ailing midsize lender, which is expected to undergo massive restructuring.
IBM, the computer services company, is one of the smaller members of the consortium and has agreed to acquire a 4.7 percent stake.
Citigroup, the only investor with banking experience, is expected to assume significant management control over the bank, which has 500 outlets, more than 12,000 employees and $48 billion in assets.
William Rhodes, chairman and chief executive of Citibank, the consumer and corporate banking arm of Citigroup, issued a statement saying, "The continued emergence of China's economy represents a tremendous opportunity for Citigroup."
The announcement caps a second consecutive year of feverish investment in China's state-owned banks by some of the world's biggest financial institutions.
Despite widespread concerns about weak risk management controls and bad loans in the Chinese banking system, global financial giants like Bank of America, HSBC, Goldman Sachs, UBS and the Royal Bank of Scotland have lined up to acquire multibillion-dollar minority stakes in China's biggest banks.
Many companies are betting on China, where the economy has been growing at a blistering pace, bank lending is skyrocketing and share prices are soaring.
The deal was announced less than a month before China was scheduled to open the country's banking sector to foreign investors as part of its commitment to the World Trade Organization.
But rather than rushing into China to set up their own branch outlets, foreign banks have been scrambling to take minority stakes in the country's troubled, but potentially lucrative, state- owned banks.
The Chinese government has encouraged investment in the banks but has been reluctant to allow foreign corporations to own majority stakes, typically limiting foreign companies to owning no more than a combined 25 percent.
One of the few major banks on the sidelines of this massive investment influx has been Citigroup, which had been looking for a way of getting into China with its own brand and management control.
Now, Citigroup is hoping to build a platform here - a foundation that could help the huge global financial institution bolster its revenue and earnings outside the United States.
In announcing the deal Thursday, Citigroup said it would acquire about a fifth of a bank that sits in one of the richest regions of China but has long been troubled by mismanagement and bad loans.
Another group of investors led by Citigroup nearly completed a deal to acquire a majority stake in Guangdong Development Bank last December. But after strong criticism of foreign involvement in the country's banking sector from some Chinese political figures, the government apparently decided to cap individual ownership of Guangdong at the standard 25 percent.
So Citigroup resubmitted its bid for the bank with two other Chinese companies, the State Grid, an electric utility, and China Life, a state-run insurance company, both of which are expected to acquire 20 percent stakes. Two other Chinese firms will also acquire a sizable stake. And IBM agreed to purchase just under 5 percent as part of the consortium.
Citigroup also owns a minority stake in another Chinese bank, the Pudong Development Bank, and it has the option of acquiring up to 19.9 percent of that lender, based in Shanghai.
The Guangdong Development Bank announcement comes just two weeks after another Chinese state-owned bank, the Industrial & Commercial Bank of China, raised more than $21 billion in the biggest public stock offering in history.
Two other Chinese state-owned banks, China Construction Bank and the Bank of China, have also gone public in the past 14 months with huge stock offerings. After the offerings, companies like Bank of America and Goldman Sachs have seen the value of their shares in those Chinese banks grow by billions of dollars.
The deal still depends on the approval of the China Banking Regulatory Commission.
BBVA agrees investments in China, Hong Kong
By Simon Kennedy, Last Update: 6:12 AM ET Nov 22, 2006
LONDON (MarketWatch) -- Spain's Banco Bilbao Vizcaya Argenta (BBV said it has agreed to buy a 5% stake in China CITIC Bank for 501 million euros ($643 million) and a 15% stake in Hong Kong-based CITIC International Financial Holdings for 488 million euros. BBVA said the deal is part of a strategic alliance with CITIC Group to develop retail and wholesale banking products in China. BBVA added it has an option to further increase its stake in both firms.
Source: http://www.marketwatch.com/News/Story/Story.aspx?guid=%7bED1AB5D1-B9C5-4620-B205-4902E31C060E%7d&siteid=yhoo&dist=yhoo
By Simon Kennedy, Last Update: 6:12 AM ET Nov 22, 2006
LONDON (MarketWatch) -- Spain's Banco Bilbao Vizcaya Argenta (BBV said it has agreed to buy a 5% stake in China CITIC Bank for 501 million euros ($643 million) and a 15% stake in Hong Kong-based CITIC International Financial Holdings for 488 million euros. BBVA said the deal is part of a strategic alliance with CITIC Group to develop retail and wholesale banking products in China. BBVA added it has an option to further increase its stake in both firms.
Source: http://www.marketwatch.com/News/Story/Story.aspx?guid=%7bED1AB5D1-B9C5-4620-B205-4902E31C060E%7d&siteid=yhoo&dist=yhoo
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