Thursday, April 20, 2006

A reader sent the latest update on the GDB-Citibank deal. According to the Shanghai Securities News, which is official and has many connections inside the government, the CBRC will not waive the 20% limit for individual investors. This is as I predicted earlier. I suppose this will give SG a much better chance, although, as some readers have observed, SG might not be the best choice in terms of getting banking expertise.

China Won't Waive Stake Limit for Guangdong Bidders, Paper Says
2006-04-19 21:55 (New York)

By Luo Jun
April 20 (Bloomberg) -- China's banking regulator probably
won't waive ownership restrictions on overseas investors who are
bidding for control of Guangdong Development Bank, the Shanghai
Securities News reported, citing a person it didn't identify.
The China Banking Regulatory Commission hasn't yet made a
decision on waiving the restriction on the Guangdong Development
sale, the newspaper said. China's banking rules limit overseas
investors to a combined stake of 25 percent in any domestic bank,
with no single investor allowed more than 20 percent.
Citigroup, the world's biggest bank by market value, is
leading a bidding group including U.S. buyout firm Carlyle Group
that's seeking to acquire 85 percent of Guangdong Development for
about $3 billion. Citigroup and Carlyle are seeking a combined 49
percent stake, people familiar with the matter told Bloomberg News
in February.
Rival bidder Societe Generale SA, together with Agence
Francaise de Development, wants to hold a total 25 percent of the
Chinese lender.
China is sensitive to the issue of ownership of its lenders.
``In reforming the state-owned banks, we need to follow the
principle that the state must take the dominant controlling
ownership in order to keep the economic viability and minimize
financial risks,'' Chinese Premier Wen Jiabao said in March.

(Shanghai Securities News, 4/20, A5)

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