DBS buys 13 per cent stake in Shenzhen Rural Commercial Bank for US$814 million as it ‘doubles down’ on bay area
- Deal positions Singapore’s biggest bank to increase presence in Greater Bay Area
- Shenzhen Rural Commercial Bank operates one of the largest branch networks in Shenzhen, DBS says
Singapore’s biggest bank will acquire 1.35 billion new shares in the privately owned commercial lender at 3.91 yuan a share, representing 1.01 times the book value of the company’s shares as of December 31, DBS said.
Following the deal, DBS will be the bank’s largest shareholder and have representation on its board of directors.
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The deal strategically positions DBS to increase its stake in the Shenzhen lender after China eased rules on foreign ownership in the financial services sector, the bank said.
The investment has been approved by the Monetary Authority of Singapore and the Shenzhen office of the China Banking and Insurance Regulatory Commission and is expected to be completed following approval by the China Securities Regulatory Commission.
Founded in 2005, Shenzhen Rural Commercial Bank operates one of the largest branch networks in Shenzhen and employs more than 3,600 people. The lender reported a net profit of 4.8 billion yuan in 2020 and had total assets of 519 billion yuan as of the end of last year, according to DBS.
The bay area has a population of more than 72 million people and had a gross domestic product of US$1.7 trillion as of the end of 2019, the equivalent of the Russian or South Korean economies.
Banks are rapidly moving to add staff and increase their presence in the planned economic hub as China eases rules to expand the flow of capital and people as it further integrates Hong Kong, Macau and nine cities in Guangdong Province.
