New | Temasek, UBS, BNP said among bidders for China’s Postal Savings Bank pre-IPO stake

UBS, Singapore’s Temasek Holdings and French bank BNP Paribas are among half a dozen preliminary bidders to buy up to a 10 percent stake in state-owned Postal Savings Bank of China (PSBC) for at least US$3 billion, people familiar with the matter told Reuters on Wednesday.

China’s biggest bank by outlets, PSBC has about 40,000 branches, and a strategic partnership could help foreign banks sell insurance and banking products to China’s vast population.

PSBC is preparing for an initial public offering next year, which could raise around $25 billion - the record for an IPO set last year by Alibaba Group - China Daily reported in February. The pre-IPO stake sale is a stepping stone that would set a valuation benchmark for that offering.

The Chinese government is open to selling a bigger stake in PSBC and prefers to sell to strategic, rather than financial, investors, said one of the individuals, who couldn’t be named as the process is confidential.

China has previously introduced strategic partners into its large state-owned banks before massive IPOs to bolster investor confidence and improve management best practice - though these have tended to turn into financial investments, with European, US and Asian stakeholders selling up for a large profit.

The planned sale comes as Chinese bank shares have jumped by almost a quarter this year on strong demand from mainland investors, and despite China’s slowing economy and the mounting bad debts of mainland banks. A Chinese banking sector sub-index is up 23 per cent year-to-date.