Talks on merging banks to skirt rules
By Maggie Zhang |
July 1, 2010, Thursday
|
Print Edition
Print Edition
Ping An Insurance (Group) Co is in talks to merge its banking unit with Shenzhen Development Bank to bypass regulations which bar insurers from controlling more than one bank.
Ping An Bank, the banking unit under the insurer, and Shenzhen Development Bank are working on an "unprecedented major restructuring," the companies said in stock exchange filings yesterday. Trading of Ping An Insurance, China's second-biggest insurer, and Shenzhen Development were suspended yesterday. Trading will resume once the go-ahead is given.
Combining the two banks would minimize possible in-fighting and help the insurer skirt the rules that ban insurance firms from controlling two banks.
The China Insurance Regulatory Commission's regulations issued in March noted that no insurer "in principle" should control more than one financial company that operates the same type of core business. That means an insurer can only have one arm in any segment of the financial industry.
There has been speculation the two Shenzhen-based banks may merge. But they have refused to comment on the issue until yesterday.
Ping An Insurance will inject its banking unit into Shenzhen Development, which will issue 1.5 billion new shares to the insurer in return, Caixin Online reported yesterday without disclosing its sources. The insurer will own 51 percent of Shenzhen Development after the transaction, which is still pending shareholder and regulatory approvals, the report said.
Ping An Insurance is already in the process of buying up 29.99 percent in Shenzhen Development to expand its domestic banking business. The insurer this week won approval to buy as many as 379.58 million new shares in the bank via a private placement for 6.93 billion yuan (US$1.02 billion). In May it bought 520.4 million shares in Shenzhen Development from Newbridge Capital LLC for 11.45 billion yuan.
Ping An Bank, the banking unit under the insurer, and Shenzhen Development Bank are working on an "unprecedented major restructuring," the companies said in stock exchange filings yesterday. Trading of Ping An Insurance, China's second-biggest insurer, and Shenzhen Development were suspended yesterday. Trading will resume once the go-ahead is given.
Combining the two banks would minimize possible in-fighting and help the insurer skirt the rules that ban insurance firms from controlling two banks.
The China Insurance Regulatory Commission's regulations issued in March noted that no insurer "in principle" should control more than one financial company that operates the same type of core business. That means an insurer can only have one arm in any segment of the financial industry.
There has been speculation the two Shenzhen-based banks may merge. But they have refused to comment on the issue until yesterday.
Ping An Insurance will inject its banking unit into Shenzhen Development, which will issue 1.5 billion new shares to the insurer in return, Caixin Online reported yesterday without disclosing its sources. The insurer will own 51 percent of Shenzhen Development after the transaction, which is still pending shareholder and regulatory approvals, the report said.
Ping An Insurance is already in the process of buying up 29.99 percent in Shenzhen Development to expand its domestic banking business. The insurer this week won approval to buy as many as 379.58 million new shares in the bank via a private placement for 6.93 billion yuan (US$1.02 billion). In May it bought 520.4 million shares in Shenzhen Development from Newbridge Capital LLC for 11.45 billion yuan.
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