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Insurer sees no insolvency in stake buy
By Zhang Fengming |
June 15, 2009, Monday
|
Print Edition
Print Edition
PING An Insurance (Group) Co's plan to purchase a stake in Shenzhen Development Bank will not cause any solvency problem, and instead it hopes to boost its ambition to develop into a diversified financial behemoth, its senior executives said yesterday.
China's second-biggest insurer will cooperate more closely with Shenzhen Development Bank to attract more clients once its 22 billion yuan (US$3.2 billion) stake purchase in the mid-size bank gets the go-ahead from shareholders and regulators, said Ping An President Louis Cheung yesterday in a teleconference.
"The stake purchase comes at a good time and we will make use of the deal to shore up our financial structure," Cheung said. "We will use our own capital for the deal and it won't cause problems for our solvency."
The insurer will own up to 30 percent of the Shenzhen bank after the completion of the deal.
Ping An Group will pay 11.4 billion yuan for 520.4 million shares in Shenzhen Development Bank held by Newbridge Capital either via cash or a share swap between Ping An's H shares and Shenzhen Development Bank's A shares.
Ping An Life Insurance, the life arm under Ping An, will buy up to 585 million shares in Shenzhen Development Bank for 10.7 billion yuan through a private placement.
Shenzhen-based Ping An is trying to become a financial conglomerate with banking and asset management "on par" with its insurance business. Ping An said in April that it would focus on the China business after its ill-fated investment in Fortis.
The insurance group's banking arm, Ping An Bank, is a small player with 28 outlets nationwide in seven cities. The stake deal could help Ping An Bank reach to the Shenzhen bank's 286 outlets in 19 cities and increase its client coverage within the Ping An Group from 15.7 percent to 80 percent, said Richard Jackson, Ping An Bank president, yesterday.
So far Ping An has not discussed with the Shenzhen bank over a possible merger of Ping An Bank and Shenzhen Development Bank at this stage, Ping An executives said yesterday. But they also didn't rule out a possible future acquisition.
China's second-biggest insurer will cooperate more closely with Shenzhen Development Bank to attract more clients once its 22 billion yuan (US$3.2 billion) stake purchase in the mid-size bank gets the go-ahead from shareholders and regulators, said Ping An President Louis Cheung yesterday in a teleconference.
"The stake purchase comes at a good time and we will make use of the deal to shore up our financial structure," Cheung said. "We will use our own capital for the deal and it won't cause problems for our solvency."
The insurer will own up to 30 percent of the Shenzhen bank after the completion of the deal.
Ping An Group will pay 11.4 billion yuan for 520.4 million shares in Shenzhen Development Bank held by Newbridge Capital either via cash or a share swap between Ping An's H shares and Shenzhen Development Bank's A shares.
Ping An Life Insurance, the life arm under Ping An, will buy up to 585 million shares in Shenzhen Development Bank for 10.7 billion yuan through a private placement.
Shenzhen-based Ping An is trying to become a financial conglomerate with banking and asset management "on par" with its insurance business. Ping An said in April that it would focus on the China business after its ill-fated investment in Fortis.
The insurance group's banking arm, Ping An Bank, is a small player with 28 outlets nationwide in seven cities. The stake deal could help Ping An Bank reach to the Shenzhen bank's 286 outlets in 19 cities and increase its client coverage within the Ping An Group from 15.7 percent to 80 percent, said Richard Jackson, Ping An Bank president, yesterday.
So far Ping An has not discussed with the Shenzhen bank over a possible merger of Ping An Bank and Shenzhen Development Bank at this stage, Ping An executives said yesterday. But they also didn't rule out a possible future acquisition.
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