Hang Seng Index Constituent Stocks

Deutsche exit leaves ING poised for Bank of Beijing stake

PUBLISHED : Friday, 11 February, 2005, 12:00am
UPDATED : Friday, 11 February, 2005, 12:00am

Deutsche Bank had suspended efforts to buy a stake in mid-tier lender Bank of Beijing, a source said yesterday.


The pull-out would leave Dutch rival ING favourably placed to acquire the stake, reportedly 19.98 per cent, in the mainland's 16th-largest commercial bank.


The two European banks are understood to have been competing for the stake since the fourth quarter of last year.


Foreign equity in mainland banks is limited to 25 per cent, with no foreign investor permitted to hold more than 20 per cent.


Bank of Beijing last month said it was in talks with at least two foreign banks to sell off a combined 24.98 per cent of its equity before a stock-market listing within two years. It aimed to conclude a deal by next month at the earliest.


The source said Deutsche Bank had completed its due diligence on the bank but declined to disclose why the bank had left the negotiations.


Beijing financial journal Caijing recently reported that ING was seen as the preferred bidder for the core 19.98 per cent stake, but held out the possibility that Deutsche Bank might take the residual equity earmarked for foreign ownership.


Spokesmen from Deutsche Bank and ING declined to comment yesterday.


'Both banks wanted to take the maximum allowable stake,' one analyst said yesterday. 'Upon failing to win the core stake, it is understandable why a bank would walk away.'


Many overseas lenders saw smaller city commercial banks, which tended to have fewer problems than the Big Four state-owned banks, as prime acquisition targets, he said.


Bank of Beijing, formerly Beijing City Commercial Bank, posted pretax profit of 2.39 billion yuan last year. At the end of December, its assets were 209 billion yuan, with deposits of 189 billion yuan.