Newbridge in 'no rush' to sell its stake in SDB

PUBLISHED : Saturday, 21 March, 2009, 12:00am
UPDATED : Saturday, 21 March, 2009, 12:00am

Shenzhen Development Bank (SDB), controlled by Newbridge Capital, said the United States private buyout firm was in 'no rush' to sell its stake, even though earnings declined 77 per cent last year.

Frank Newman, chairman of the Shenzhen-listed lender, said yesterday Newbridge, which owns 17 per cent of the bank, was not ready for a stake sale.

'Sooner or later, they will sell the stake, since they also have fiduciary duties to investors,' he said. 'But there's no rush. When that time comes, the share sale will be undertaken in a responsible way.'

Mr Newman also denied the bank had held talks with China Development Bank (CDB), which reportedly planned to acquire a stake in the lender last month.

Market watchers had speculated CDB, the country's largest policy lender, would buy a controlling stake in SDB from Newbridge after its lock-up period ended in December.

Mr Newman said profit for the first quarter was 'clearly up' from the same period last year, despite pressure from lower interest margins.

'Net interest income, deposit and loans were all up, and our loans continue to grow despite being cautious about credit quality,' he said.

Corporate banking generated 26 per cent growth in deposits and 33 per cent in loans last year. The number of trade finance customers grew 30 per cent.

But the bank's foray into the small-enterprise business would pose a new challenge to the quality of its loans, said its president, Xiao Suining.

Beijing has urged mainland banks to boost credit support for small and medium-sized enterprises, as well as rural sectors that have been battered by the economic downturn.

Goldman Sachs said in an earlier report the bank's high loan-to-deposit ratio and relatively high exposure to mid-sized manufacturers would be key risks after removing an overhang for its legacy bad loans.

SDB fell 2.9 per cent to 15.33 yuan in Shenzhen after the results were announced.