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Australian bank buys 19.9% stake in local city lender

(China Daily)
Updated: 2006-11-22 08:55

Australia and New Zealand Banking Group Ltd (ANZ), Australia's third-largest lender, yesterday agreed to buy a 19.9 per cent stake in Shanghai Rural Commercial Bank (SRCB) for US$252 million.

The equity investment, ANZ's second in China, is "a significant step in the bank's Asian growth strategy," said John McFarlane, the Australian bank's chief executive officer.

In July, the bank paid US$111.5 million for a 20 per cent stake in Tianjin City Commercial Bank.

"More foreign financial institutions will invest in these relatively small local banks, despite their weak performance," said Zhang Qi, an analyst at Haitong Securities.

Last week, a Citigroup-led consortium signed a US$3.06 billion deal for an 85.6 per cent stake in Guangdong Development Bank.

"These investments are part of a long-term game, with foreign investors expecting to benefit from China's rapid economic growth," he said.

"The strategic partnership provides an opportunity to play a role in one of the fastest growing banking markets in the world," McFarlane said.

As part of the partnership, ANZ will provide technical assistance to the Shanghai bank, including a specific programme over the next three years through a US$5 million technical support fund.

In 2004, the Australian bank started to offer technical advice to SRCB, which was transformed from a rural credit co-operative in August 2005.

"After the three years of business co-operation, we have established a close relationship which provides an excellent foundation for future access," McFarlane said.

The bank said it will have two representatives on SRCB's board and will contribute management resources.