Huijin to shuffle management of Everbright Bank
Central Huijin Investment, which gained control of China Everbright Bank last month, plans to shake up the bank's management and eventually let Standard Chartered effectively run the lender, sources said.
The mainland government investment arm gained a more than 51 per cent stake in the country's ninth-largest lender after pumping 20 billion yuan into the bank, the sources said.
Standard Chartered of Britain would take a 20 per cent stake and was now negotiating terms, they said.
A spokeswoman for Standard Chartered said the bank 'would not comment at this time'.
Huijin did not return calls seeking comment.
An Everbright Bank spokesman directed inquiries to its company directors, who were not available for comment.
Everbright Bank chairman Wang Mingquan, who is also chairman of parent Everbright Group, had secured his position at the bank before the bailout, the sources said.
Huijin had wanted to remove him and still plans to remove other senior managers to turn the troubled bank around.
'You'd think with it originally not owned by the government, the bank would be spared the policy lending but they've lent real stupidly,' said a banking analyst.
'You need the central government to step in because they have enough regulatory and legal power to force the Everbright Group to do something.'
The bank had HK$27.3 billion in non-performing loans at the end of June last year. In February, it said lending rose 16 per cent to 352 billion yuan last year, driving its profits up 21.65 per cent.
Huijin wants Standard Chartered, which earned 92 per cent of its profit from Asia last year, to manage the bank after a deal was sealed, the sources said.
'With foreign-invested banks it isn't clear how much say they have in day-to-day management and while you can fire a few high-level managers, that will not stop the problems,' the banking analyst said.
'Frankly, bank mergers generally just don't work because the opportunity to buy is when the target is in distress.'
The bailout and strategic investment talks have pushed back China Everbright's plans to raise between US$2 billion and US$3 billion from an initial public offering until next year, sources said.
The plan now is to raise about 50 per cent of the funds in Hong Kong and the other half in the domestic market. The bank had planned to sell shares in Hong Kong only.
Mainland securities regulators are pressuring listing candidates to sell shares in the domestic market to deepen the investment choice for local investors.