Temasek gets nod for 5% BOC stake
(Standard)
Updated: 2006-01-12 13:53

Singapore's Temasek Holdings can buy 5 percent of Bank of China - half the initial agreed stake - under a preliminary decision by the mainland's State Council and banking regulator. They also approved stake purchases by three other foreign investors, according to a source.

Temasek - a Singapore government investment arm already holding 5.1 percent of China Construction Bank and 4.55 percent of China Minsheng Banking - had its original US$3.1 billion (HK$24.18 billion) bid to own 10 percent of BOC turned down by the mainland government on concern for China's financial stability.

Eva Ho, Temasek's spokeswoman in Singapore, was not available for comment Wednesday. In Beijing, BOC spokesman Wang Zhaowen declined to comment.

BOC, the mainland's second-largest bank, and China's other leading lenders - Industrial and Commercial Bank of China, China Construction Bank and Agricultural Bank of China - have been urged by the central government to restructure, attract foreign strategic investors and seek stock market listings before the country's financial sector becomes fully open to foreign banks at the end of this year.

BOC may raise more than HK$60 billion through an initial public offering in Hong Kong before June.

Beijing-based BOC agreed last year to sell a combined 21.84 percent stake to a Royal Bank of Scotland-led group, Singapore's Temasek, UBS AG and Asian Development Bank.

BOC last August said it would sell a 10 percent stake to Royal Bank of Scotland, Merrill Lynch and a foundation set up by billionaire Li Ka-shing for US$3.1 billion.

UBS has injected US$500 million for a 1.6 percent stake in BOC, a source at the Swiss bank said in Hong Kong Wednesday.

"The deal was closed by the end of last year," the source said. UBS will cooperate with BOC in the mainland's investment banking and securities sectors.

An ADB source said Wednesday that "all approvals have been received and the plans to purchase the [BOC] stake are proceeding." ADB will inject about US$75 million for 0.24 percent in BOC.

China has set 25 percent as the maximum stake that its domestic banks can sell to foreign financial institutions. A single overseas investor can buy up to 20 percent in a Chinese bank.

BOC already has permission from the State Council, China's cabinet, for an IPO in Hong Kong this year and the bank is expected to file a listing application to the Hong Kong Stock Exchange very soon, a source said.

The bank's overseas listing program is waiting approval from the mainland's China Securities Regulatory Commission.

The combined size of the planned two IPOs by ICBC, the country's largest commercial lender, and BOC is expected to be between HK$120 billion and HK$140 billion, pushing the amount of funds raised through IPOs in Hong Kong to a record HK$200 billion in 2006, according to accounting firm PricewaterhouseCoopers.

ICBC's IPO is scheduled for the fourth-quarter.

CCB, the third-largest commercial lender, sold US$9.2 billion worth of shares in October, four months after Bank of Communications - the fifth- biggest bank on the mainland - raised US$1.9 billion in Hong Kong.