Spain's BBVA sells part of stake in China Citic worth 944 euros

PUBLISHED : Friday, 18 October, 2013, 4:31am
UPDATED : Friday, 18 October, 2013, 4:31am

China Citic Bank's stock surged as much as 5.3 per cent yesterday after Spanish shareholder Banco Bilbao Vizcaya Argentaria (BBVA) sold about a third of its stake to controlling shareholder Citic Group for €944 million (HK$9.97 billion), reducing its holding to 9.9 per cent from 15 per cent.

The lender is the latest foreign bank to sell stock in a Chinese bank, after Bank of America offloaded all its stake in China Construction Bank for about HK$11.6 billion last month.

Some analysts said BBVA's move was an adjustment to deal with Basel III capital rules that limit financial holdings. Yuanta Securities analyst Vicky Wang said she believed concerns over local financial government vehicles and the bad debts of Chinese banks were also factors in the exit of long-term foreign investors.

"Among the joint-stock mainland banks, Citic Bank had a weaker performance in the first half," Wang said. "It might also be a reason for BBVA to offload."

Citic Bank's net profit rose a mere 5.07 per cent in the first half from the same period last year. That was in stark contrast to its joint-stock rivals, which saw growth rates in the double digits.

BBVA, Spain's second-largest bank, said it would take a charge of about €2.3 billion on the year's net profit, making a provision for its entire 15 per cent stake after taking the changed accounting criteria for financial investments into account. Its move also raises concerns another Spanish bank, CaixaBank, may follow suit with its 16.5 per cent holding in Hong Kong-based Bank of East Asia.

A CaixaBank spokesman said it would continue strategic agreements with other financial institutions. "These positions include CaixaBank's 16.5 per cent holding in the Bank of East Asia, with which it shares a strategic partnership agreement," he said.

BBVA would continue to hold 9.9 per cent of the bank's shares, Citic Bank said in a filing to the Hong Kong stock exchange after the morning trading session. "Citic and BBVA are confident in the future prospects of the bank [Citic], and it is BBVA's current intention to remain a key long-term investor," it said.

Citic Bank traded at HK$4.15 before the announcement and it rose to close the day 2.65 per cent higher at HK$4.26.

Citic Group's equity interest increased to 66.95 per cent.