UPDATE:Shanghai Pudong Bank:Citigroup Has No Plan To Sell Shares
January 08 2009 - 11:16PM
Dow Jones News
Shanghai Pudong Development Bank Co. (600000.SH) said Friday
foreign strategic investor Citigroup Inc. (C) has no plan at
present to sell its 3.8% stake in the mid-sized Chinese lender
after the lockup period for the shares expired late December.
The comment helped support Shanghai Pudong Bank's share price
early Friday, following sharp declines in Chinese banking stocks
this week on concerns about cash-starved foreign lenders selling
down their stakes.
At the Shanghai stock market's midday close, Shanghai Pudong
Bank's shares were up 2.6% at CNY14.01 ($2.05), compared with a
0.3% gain in the benchmark Shanghai Composite Index.
"As far as I know, Shanghai Pudong Bank hasn't received a notice
from Citi that it plans to sell its stake in our bank," said Shen
Si, board secretary of the Chinese bank. "So far the two parties
are happy with the alliance."
Stephen Thomas, a spokesman at Citibank China, declined to
comment on the issue.
"Citi's relationship with SPD Bank remains strong and we look
forward to continuing to partner with SPD Bank to our mutual
benefit," he said.
Citigroup paid about CNY600 million for a 5% holding in Shanghai
Pudong Bank in 2002, with the option of increasing its stake
subject to regulatory approval. Citigroup said at the time it would
help the Chinese bank improve its risk management, retail banking,
and credit-card business.
However, Citigroup's stake was diluted to 3.8% following
additional share offerings by Shanghai Pudong Bank.
Analysts have also queried the future of Citigroup's partnership
with Shanghai Pudong Bank after the U.S. lender led a consortium
two years ago to acquire a combined 85% stake in south China-based
Guangdong Development Bank.
Citibank China's Thomas said he wouldn't comment on future
plans.
Citigroup, like many banks in the West, has been severely hit by
the financial crisis. Last year, the U.S. government injected US$45
billion in capital into the bank, and agreed to shoulder hundreds
of billions of dollars of potential losses on its risky assets.
Investors believe Citigroup may also seek to raise cash by
following the example of some other Western banks that have sold
down stakes they bought in Chinese banks' initial public offerings
in 2005 and 2006, following the end of three-year lockup
periods.
Last week, UBS AG sold its entire 1.33% stake in Bank of China
Ltd. for US$808 million, becoming the first foreign investor to
exit a major Chinese lender.
Since then, Bank of America Corp. raised US$2.8 billion by
cutting its stake in China Construction Bank Corp. to 16.6% from
19.1%, and the Li Ka Shing Foundation sold 2 billion shares in Bank
of China in a placement that raised US$511 million for the
charitable foundation owned by Hong Kong's richest man.
Royal Bank of Scotland Group PLC also said Thursday it is
considering selling its 4.3% stake in Bank of China.
-Rose Yu contributed to this story, Dow Jones Newswires; 8621
6120-1200; rose.yu@dowjones.com
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