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| Bank of China Sells 5% Stake to Singapore's Temasek |
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Bank of China (BOC) said yesterday that it has sold a 5 percent stake sale to Singapore-based Temasek Holdings (Private) Limited, moving it one step closer to its initial public offering (IPO). However, there are no available details on the value of the transaction. BOC spokesman Wang Zhaowen said the lender had also finished its pre-IPO talks with other strategic investors. BOC announced late last year that, by October 6, it had signed strategic investment agreements with the Royal Bank of Scotland Group, Swiss bank UBS, Temasek, and the Asian Development Bank. According to the agreements, the four were to pay a combined US$6.775 billion for a collective 21.85 percent stake in BOC. But BOC's parent, Central Huijin Investment Co (also known as China SAFE Investments), which controls 100 percent of the bank, did not approve the entire Temasek deal. According to the agreement signed between BOC and Temasek last August, BOC was to sell a 10 percent stake for US$3.1 billion to the Singapore company. "Central Huijin only approved the sale of a 5 percent stake to Temasek," Wang said. Beijing-based Caijing Magazine reported that Central Huijin opposed the sale of a larger stake because it was concerned with foreign strategic investors having too much control, and that Chinese lenders were selling assets too cheaply. Temasek last July paid US$1.5 billion for a 5.1 percent stake in China Construction Bank, which raised US$9.2 billion from its Hong Kong IPO last year. It also bought a 4.55 percent stake in China Minsheng Banking Corp last January. Eva Ho, spokeswoman for Temasek in Singapore, declined to comment but confirmed the company had completed the 5 percent deal with BOC. "We are now busy preparing for the final IPO," Wang said, declining to specify the place and the time of the IPO. Previous media reports said the bank would list in Hong Kong in the first half of this year and in Shanghai in the second half. BOC last August named Goldman Sachs Group Inc, UBS and Bank of China International as its financial advisors and lead underwriters for the planned IPO. The bank received a US$22.5 billion capital injection from the government in late 2003. It was one of the pilot projects for China's reform of state-owned banks. The bank reorganized itself into a joint-stock company named Bank of China Limited in August 2004. So far the bank has not released its financial results from last year. By the end of last June, the bank's non-performing credit rate declined to 4.38 percent, from 5.12 percent at the beginning of the year. Its capital adequacy ratio stood at 10.04 percent at the end of 2004. (China Daily February 17, 2006) |
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