Share out and co-operate
(XIAO CHANG)
01/07/2002
Britain's Hong Kong and Shanghai Banking Corp and the Hong Kong-based Shanghai Commercial Bank became the first two foreign banks to take stakes in a mainland bank on December 29, 2001. HSBC bought 8 per cent of the Bank of Shanghai for 518 million yuan (US$62.6 million), while Shanghai Commercial Bank bought 3 per cent for 194 million yuan (US$23.4 million). International Finance Corp, the World Bank's private investment arm, paid 204 million yuan (US$25 million) to increase its stake in the Bank of Shanghai from 5 to 7 per cent. Other shareholders, including Shanghai municipal and district governments and Shanghai-based State-owned enterprises, also increased their investment. Through selling new shares, the Bank of Shanghai has increased its registered capital to 2.6 billion yuan (US$313 million) from 2 billion yuan (US$241 million). With a total of 18 per cent owned by foreign financial institutions, the Bank of Shanghai is the first bank on the Chinese mainland to absorb equity investment from overseas banks. "The move enables us to share HSBC's global network and its advanced management and sales expertise. I have full confidence in long-term and comprehensive co-operation between the Bank of Shanghai and HSBC," said Bank of Shanghai President Fu Jianhua. "The stake acquisition reflects our confidence in the future of Bank of Shanghai and the economic potential of China," said HSBC Chairman David Eldon. HSBC's stake in the Bank of Shanghai will be complementary to its existing operations with two banks focusing on different market segments, he added. Earlier, the Shanghai-based Bank of Communications, the nation's largest shareholding commercial bank, said it was planning to sell 15 per cent of its assets to two to three foreign financial giants in order to strengthen its position in the market. But Citigroup Chairman Sanford Weill, the most committed suitor for Bank of Communications, refused to comment on the issue when he visited Shanghai early last month. Analysts say that with China's entry into the WTO, foreign banks are striving to gain a better position for the follow-up competition in the market. This is particularly so in Shanghai, which is viewed by many multinationals as their first stop in tapping the nation's 7-trillion-yuan (US$850 billion) household savings market.
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