Bank of China

Royal Bank of Scotland in talks for stake in Suzhou Trust

PUBLISHED : Thursday, 20 December, 2007, 12:00am
UPDATED : Thursday, 20 December, 2007, 12:00am

Royal Bank of Scotland, which holds 8.25 per cent of Bank of China, is in talks to buy 19.9 per cent of Suzhou Trust to secure a foothold in the fast-growing asset management sector.

'The two parties have got initial results in negotiations over key issues such as the selling price and the size of the stake,' the mainland's 21st Century Business Herald quoted sources as saying. No price was disclosed and neither company could be reached for comment.

Suzhou Trust, based in Jiangsu province, is a non-bank financial institution providing advisory and investment management services. It had assets of 6.7 billion yuan at the end of last year.

An analyst from a United States brokerage said foreign banks were keen to expand on the mainland.

'To take a stake in the trust company is the only way they can tap the trust sector as no new licence will be issued,' said the analyst, adding that the profit contribution to Royal Bank of Scotland initially would not be very large.

It would be the second purchase by Royal Bank of Scotland on the mainland.

The British bank also worked with Bank of China to establish private banking on the mainland in a bid to tap the growing number of millionaires. Royal Bank of Scotland provided product development and technical assistance to BOC.

British-based Barclays had won regulatory approval to buy a stake of almost 20 per cent in New China Trust and Investment, and would have the option to increase its stake in the trust company if Beijing lifted its investment cap for foreign firms, Reuters quoted sources as saying in July.

Other foreign lenders, such as Morgan Stanley and UBS, were also in talks with potential mainland partners, the report said.

A single foreign investor is allowed to buy no more than a 20 per cent stake in a mainland trust company, while foreign investors can own a combined stake of up to 25 per cent.