Deutsche Bank to seal Huaxia deal
(Shenzhen Daily/Agencies)
Updated: 2005-10-17 09:06

Deutche Bank is set to seal its first investment in a Chinese bank Monday, signing an agreement to lead the purchase of nearly 14 percent of Huaxia Bank (SHA: 600015) for over US$320 million, Huaxia executives involved in the deal said.

Deutsche, Germany’s top lender, would pay US$220 million for 9.5 percent of Huaxia, four senior Huaxia executives familiar with the deal said, underscoring growing interest in the country’s second-tier commercial lenders.

Private bank Sal. Oppenheim would pay another US$104.1 million for about 4.5 percent, two Huaxia executives said.

Top executives with Deutsche and Huaxia are due to meet in Beijing on Monday to sign a final investment deal after nearly a year of negotiations, all four said.

“Deutsche will lead the investment, taking about 9.5 percent of Huaxia. Sal. Oppenheim, which was brought in by Deutsche, will take 4.5 percent or so,” a Beijing-based senior Huaxia executive said on condition of anonymity.

“The total investment will be worth (nearly) US$330 million,” he said.

A Deutsche Bank spokesman in Singapore declined to comment.

Once finalized, the deal would mark the European firm’s first direct investment in China’s banking industry, after it lost a bid to buy into Bank of Beijing in March to Dutch rival ING and the World Bank’s International Finance Corp.

Deutsche plans to pay about 4.50 yuan (US$0.55) a share for its stake in the second-smallest of five lenders listed on China’s Shanghai and Shenzhen exchanges, according to Huaxia executives.

That represented a 9 percent premium to the bank’s public shares, which closed 0.24 percent down at 4.13 yuan Friday.