Acquisition indicates quicker reform
Print Edition
SHANGHAI Pudong Development Bank plans to buy 97.3 percent of Shanghai International Trust Co for 16.4 billion yuan (US$2.6 billion) as the city accelerates financial reform.
The bank and the trust company are both held by Shanghai International Group, the city government’s investment arm.
Pudong Bank will issue 999.5 million shares at 16.36 yuan each to 11 trust shareholders to pay for the acquisition, according to a filing to Shanghai Stock Exchange yesterday.
The purchase signals the state-backed company plans to create a financial conglomerate, said Song Qinghua, president of the School of Finance at Zhongnan University of Economics and Law.
Shanghai International Group, which owns 1.8 trillion yuan of assets under management, is overhauling its holdings in banks, brokerages, insurance companies and trusts.
The move also comes as the Chinese government accelerates the biggest reform of its state-owned enterprises since the late 1990s.
Lu Zhengwei, senior economist at the Industrial Bank, said commercial banks are feeling the heat from the liberalization of interest rates and eying acquisition of insurance, securities and trust firms to expand revenue stream.
Pudong Bank’s Shanghai-listed shares will continue to be suspended due to the acquisition. They last traded on June 5.
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