Phone firm takes 20% bank stake
By Zhang Fengming |
March 11, 2010, Thursday
|
Print Edition
Print Edition
CHINA Mobile has agreed to buy 20 percent of Shanghai Pudong Development Bank for 39.8 billion yuan (US$5.8 billion) to become the second-biggest share holder of the joint stock bank.
The deal quenches the bank's thirst for capital to support expansion.
China Mobile, the world's largest provider of mobile telecommunications, signed a deal to buy 2.2 billion yuan-backed A shares of the Shanghai-based bank, it said in a statement to the Hong Kong stock exchange yesterday.
"Money from the state-controlled telecom operator will provide a sizable cushion to the Pudong Development Bank's capital adequacy ratio at a time when the Chinese government is encouraging the country's major banks to boost their capital in view of rapid loan growth," said Moody's Investors Service in a report.
Chinese banks are lining up to raise capital through new shares offers, bond sales or private placements to plug a capital shortage due to their lending in the past year.
Wu Yonggang, a Guotai Jun'an Securities Co analyst, estimated that the bank's capital adequacy ratio, the main gauge of banks' financial strength, will increase close to 14 percent after the deal to support the bank's stable expansion in three years.
Joint stock banks must meet a minimum 10 percent requirement this year.
Banks with tight capital may be banned from geographic expansion or introducing certain products, the China Banking Regulatory Commission has warned.
The deal will help the bank diversify from a corporate banking-centered business by moving into China's burgeoning consumer market, Moody's said.
As a mid-sized joint stock bank in the second string of China's banking industry, the Pudong bank may hope that the tie-up with the mobile operator will provide access to China Mobile's close to 530 million subscribers.
It is China Mobile's first major transaction outside its core telecom business.
In Asia, the rise of mobile-payment systems, together with the growth of remittances, has driven investment by telecom operators in banks and credit-card companies. Similar transactions were found in Japan, South Korea and the Philippines.
But the deal has possible side effects. "The transaction could distract China Mobile's management during the rollout of the home-grown TD-SCDMA, 3G mobile platform," the rating firm said.
The deal quenches the bank's thirst for capital to support expansion.
China Mobile, the world's largest provider of mobile telecommunications, signed a deal to buy 2.2 billion yuan-backed A shares of the Shanghai-based bank, it said in a statement to the Hong Kong stock exchange yesterday.
"Money from the state-controlled telecom operator will provide a sizable cushion to the Pudong Development Bank's capital adequacy ratio at a time when the Chinese government is encouraging the country's major banks to boost their capital in view of rapid loan growth," said Moody's Investors Service in a report.
Chinese banks are lining up to raise capital through new shares offers, bond sales or private placements to plug a capital shortage due to their lending in the past year.
Wu Yonggang, a Guotai Jun'an Securities Co analyst, estimated that the bank's capital adequacy ratio, the main gauge of banks' financial strength, will increase close to 14 percent after the deal to support the bank's stable expansion in three years.
Joint stock banks must meet a minimum 10 percent requirement this year.
Banks with tight capital may be banned from geographic expansion or introducing certain products, the China Banking Regulatory Commission has warned.
The deal will help the bank diversify from a corporate banking-centered business by moving into China's burgeoning consumer market, Moody's said.
As a mid-sized joint stock bank in the second string of China's banking industry, the Pudong bank may hope that the tie-up with the mobile operator will provide access to China Mobile's close to 530 million subscribers.
It is China Mobile's first major transaction outside its core telecom business.
In Asia, the rise of mobile-payment systems, together with the growth of remittances, has driven investment by telecom operators in banks and credit-card companies. Similar transactions were found in Japan, South Korea and the Philippines.
But the deal has possible side effects. "The transaction could distract China Mobile's management during the rollout of the home-grown TD-SCDMA, 3G mobile platform," the rating firm said.
- About Us
- |
- Terms of Use
- |
-
RSS - |
- Privacy Policy
- |
- Contact Us
- |
- Shanghai Call Center: 962288
- |
- Tip-off hotline: 52920043
- 沪ICP证：沪ICP备05050403号-1
- |
- 互联网新闻信息服务许可证：31120180004
- |
- 网络视听许可证：0909346
- |
- 广播电视节目制作许可证：沪字第354号
- |
- 增值电信业务经营许可证：沪B2-20120012
Copyright © 1999- Shanghai Daily. All rights reserved.Preferably viewed with Internet Explorer 8 or newer browsers.
