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ICBC and Goldman talk about US bank trimming its stake
By Michael Flaherty |
March 25, 2009, Wednesday
|
Print Edition
Print Edition
GOLDMAN Sachs Group Inc and the Industrial and Commercial Bank of China have been in discussions about the New York bank reducing its stake in the world's largest financial institution, according to a report yesterday.
Like other Western banks before it, Goldman has been expected to consider selling down part of its 4.9-percent ownership of ICBC when the lock-up period ends at the end of next month.
That stake is worth about US$8.5 billion, based on ICBC's market capitalization of about US$178 billion which makes it the world's biggest bank by that measure. The Wall Street Journal yesterday said a Goldman sell down could raise about US$1 billion for the bank by selling 15-20 percent of its holding.
ICBC signed a deal in 2005 to sell a 10-percent stake to a consortium that included Goldman, European insurer Allianz AG and American Express Co for more than US$3 billion.
Equity capital market bankers in Asia expect the other two members of the consortium to consider selling their stakes as well, as their lock-up periods also end at the end of next month.
ICBC's shares soared after the bank went public in 2006, nearly tripling in price by November 2007. But the global economic slowdown has taken its toll on the bank.
Major Western shareholders in other Chinese banks have also been trimming or selling their stakes to free up cash and help restore their battered balance sheets.
Bank of America raised US$2.83 billion in January by selling part of its stake in China Construction Bank. Royal Bank of Scotland sold 4.26 percent in the Bank of China that same month, raising US$2.34 billion.
"Whether Goldman sells is difficult to call. It's been talked about ad nauseum since the CCB placement," said JPMorgan analyst Sunil Garg. "Some of the commercial banks have had a bigger need for capital in their own markets than Goldman. But yes, it's a possibility."
Garg pointed out that shares of Chinese banks that had Western sellers have widely risen since the sell down.
Like other Western banks before it, Goldman has been expected to consider selling down part of its 4.9-percent ownership of ICBC when the lock-up period ends at the end of next month.
That stake is worth about US$8.5 billion, based on ICBC's market capitalization of about US$178 billion which makes it the world's biggest bank by that measure. The Wall Street Journal yesterday said a Goldman sell down could raise about US$1 billion for the bank by selling 15-20 percent of its holding.
ICBC signed a deal in 2005 to sell a 10-percent stake to a consortium that included Goldman, European insurer Allianz AG and American Express Co for more than US$3 billion.
Equity capital market bankers in Asia expect the other two members of the consortium to consider selling their stakes as well, as their lock-up periods also end at the end of next month.
ICBC's shares soared after the bank went public in 2006, nearly tripling in price by November 2007. But the global economic slowdown has taken its toll on the bank.
Major Western shareholders in other Chinese banks have also been trimming or selling their stakes to free up cash and help restore their battered balance sheets.
Bank of America raised US$2.83 billion in January by selling part of its stake in China Construction Bank. Royal Bank of Scotland sold 4.26 percent in the Bank of China that same month, raising US$2.34 billion.
"Whether Goldman sells is difficult to call. It's been talked about ad nauseum since the CCB placement," said JPMorgan analyst Sunil Garg. "Some of the commercial banks have had a bigger need for capital in their own markets than Goldman. But yes, it's a possibility."
Garg pointed out that shares of Chinese banks that had Western sellers have widely risen since the sell down.
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