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CITIC Bank plans HK listing after Spanish firm buys 5 percent

(China Daily)
Updated: 2006-11-24 08:48

China CITIC Bank, the country's seventh-largest bank by assets, said it will float its shares in Hong Kong early next year after Spanish banking group Banco Bilbao Vizcay Argentaria (BBVA) agreed on Wednesday to spend US$635 million to purchase a 5 per cent stake in the bank.

"We plan to launch our initial public offering (IPO) in Hong Kong early next year, and then go back to the Shanghai bourse," said Chen Xiaoxian, president of CITIC Bank. Chen hopes to raise at least US$2 billion from its IPO in Hong Kong. Citibank, HSBC, Lehman Brothers, CICC and CITIC Securities are underwriters for the listing.

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"The amount of money that we raise will depend on the situation at the time (of the float), but I think we can raise at least US$2 billion, judging by our current growth," Chen added.

CITIC Bank reported its listing plan to the State Council in May and had been looking for a strategic partner.

Insiders said Japan's Mizuho Financial Group Inc, France's BNP Paribas and China Life Insurance were looking at buying in, but Spanish bank BBVA finally won the campaign.

BBVA, a multinational financial services group that operates in 32 countries, announced an investment of 989 million euros (US$1.2 billion) on Wednesday. The money will go to over 5 per cent of CITIC Bank at 501 million euros (US$634 million), and 15 per cent of CITIC International Financial Holdings (CIFH) for 488 million euros (US$617 million). In return, BBVA will have one director on CITIC Bank's board and two on CIFH's.

The deal is subject to government approval.

This is the biggest investment by a Spanish company on the Chinese mainland and in Hong Kong so far, showing BBVA's decision to explore the Asia market. The Spanish bank has an option to increase its stake in CITIC Bank to 9.9 per cent.

The alliance between BBVA and CITIC covers the development of retail and corporate banking on the mainland and in Hong Kong, one of the fastest growing markets in the world. The co-operation between BBVA and CIFH, CITIC Group's international arm, will focus on corporate banking, investment banking and treasury business across Asia.

By the end of September, Beijing-headquartered CITIC Bank saw total assets reach 689.52 billion yuan (US$87.3 billion), up 11.84 per cent compared with the end of last year. The bank's non-performing loans and capital adequacy ratio, two key indicators for its financial status, hovers around 2.79 per cent and 9.18 per cent respectively, better than the industry average. Its pre-tax profit topped 5.7 billion yuan (US$722 million), an increase of 2 billion yuan (US$253 million) quarter-on-quarter.

(China Daily 11/24/2006 page9)