|ING to Buy 20% of Bank of Beijing for 1.78 Bln Yuan (Update3) |
March 25 (Bloomberg) -- ING Groep NV, the biggest Dutch financial-services company, said it agreed to buy 20 percent of Bank of Beijing Co. for 1.78 billion yuan ($215 million), seeking to tap affluent customers in China as the nation prepares to lift curbs on foreign participation in its banking industry.
The International Finance Corp., the World Bank's private equity arm, will also buy 5 percent of Bank of Beijing, the second-largest city commercial bank in China and the third- largest bank in the nation's capital, a company statement said.
``This investment will allow ING to deepen its penetration into the Beijing market, and provide us with a platform to sell a range of insurance and investment products to an increasingly affluent customer base.'' ING Chairman Michel Tilmant said in the statement issued before a press conference in Beijing.
ING joins foreign lenders, including HSBC Holdings Plc and Commonwealth Bank of Australia, in seeking a share of the growing market for financial services in the most populous nation, which clocked economic growth of 9.5 percent last year, an eight-year high and the fastest for a major economy. China's banking regulator last year allowed the nation's city commercial banks to expand outside their home bases for the first time, making them more attractive to overseas banks.
``The government is encouraging China's city banks to sell stakes to foreign lenders in order to strengthen the industry,'' said Liang Jing, an analyst at Guotai Junan Securities Co. in Shanghai. ``For foreign investors, Bank of Beijing is not a bad choice as it's relatively small, easier to control, not bad in asset quality and is situated in China's capital city.''
Household savings in yuan reached record 12.8 trillion yuan at the end of February, a 15.5 percent increase from a year earlier, according to central bank data.
Foreign banks are seeking partners in China as the nation prepares to open up its financial services industry next year under the provisions of its agreement to enter the World Trade Organization in December 2001. Foreign ownership in domestic lenders is restricted to 25 percent.
HSBC, Europe's biggest bank by market value, agreed in August to acquire 19.9 percent of Bank of Communications, the country's fifth-biggest lender, for 14.46 billion yuan.
Commonwealth Bank last year won regulatory approval for its purchase of a stake in Jinan City Commercial Bank and has an option to buy a total of a fifth of that lender. Hangzhou Bank in the eastern province of Zhejiang said Commonwealth is also negotiating to buy a stake in it.
Bank of Beijing's pretax profit last year rose to 2.39 billion yuan ($288 million) from 1.85 billion yuan in 2003. Assets totaled 209 billion yuan ($25.2 billion) at the end of last year, outstanding 109.6 billion yuan and deposits 189 billion yuan.
The bank's bad-loan ratio at the end of 2004 was 4.8 percent and its capital-adequacy ratio, a key measure of a bank's financial strength, was 8.36 percent, Chairman Yan Bingzhu said at a Jan. 8 press briefing.
ING in China
ING owns two life insurance ventures and an asset-management venture in China. ``ING is keen to expand business in many fronts in China,'' Guotai Junan's Liang said.
In July 2000, ING bought the international life insurance operations of Aetna Inc., which owns a life insurers venture with China's China Pacific Insurance Co. ING in 2002 won regulatory approval to start business in its second life insurance venture with China's Capital Group. ING Capital Life Insurance Co. is based in China's northern city of Dalian and is half owned by ING.
The Dutch company also owns one-third of a fund management venture with China Merchants Securities Co. The venture, which is based in the southern city of Shenzhen, started operations in 2003.
ING can also invest as much as $50 million buying yuan- denominated shares and bonds under a so-called qualified foreign institutional investor, or QFII, program.