Citibank loses out in Pudong

PUBLISHED : Wednesday, 04 December, 2002, 12:00am
UPDATED : Wednesday, 04 December, 2002, 12:00am

A newly formed financial and investment arm of the Shanghai government, and not front-running international suitor Citibank, was announced yesterday as the buyer of a stake in the Shanghai Pudong Development Bank.

In an announcement to the Shanghai Stock Exchange, Jinqiao Export Processing Zone Development said it had sold its entire 60 million untradeable A shares of Pudong bank, or 1.66 per cent of the Shanghai-listed bank's share capital, to unlisted Shanghai International Group.

That went counter to market expectations the United States banking giant would get the shares.

Jinqiao was selling the stake at 2.35 yuan each, or 141 million yuan (about HK$132.13 million) in total, reaping a hefty book profit of 78 million yuan, it said.

The developer also announced it would sell minority stakes in other Shanghai-based financial institutions - including the Bank of Communications, Shanghai Haitong Securities, Guotai J&A Securities and Oriental Securities - as part of a plan to reduce non-core operations and refocus on property.

Yet to be determined is whether Shanghai International is taking the Pudong bank stake as a transitional move on behalf of the Shanghai municipal government as some market watchers suggest.

The stake will eventually be pooled when it is sold to foreign investors.

Pudong bank is the second-largest of the four mainland-listed banking counters.

The lender employs 6,116 people in 267 branches and booked a first-half net profit of 555.44 million yuan this year.