Bank Of China To Withdraw From Auto-Financing JV With Peugeot
May 07 2009 - 11:19PM
Dow Jones News
Bank of China Ltd. (3988.HK), one of China's Big Four state-run
banks, said it is withdrawing from an auto-financing joint venture
with Dongfeng Motor Group Co. (DNFGY) and Peugeot SA (PEUGY), only
two years after launching the venture.
Bank of China's wholly owned unit BOC Insurance, which owns 50%
of the venture, is selling its stake for CNY328 million (US$48
million), according to an auction statement posted on the Beijing
Equity Exchange earlier this week.
"The potential buyer should be an auto manufacturer or auto
sales company, or a non-banking financial company," said the
statement.
Wang Zhaowen, a spokesman at Bank of China, said Friday further
information on the sale, including the reason for the bank's
withdrawal, isn't available at present.
Officials at Dongfeng and Peugeot weren't immediately available
for comment.
In recent years, many global car makers such as General Motors
Corp., Ford Motor Co. and Volkswagen AG have forged partnerships
with Chinese banks to offer auto loans, to take advantage of the
country's burgeoning auto-financing business.
Though China overtook the U.S. to become the world's largest
light-vehicle market in the first quarter by sales, growth of auto
financing has been slow because of China's undeveloped credit
system and a cultural preference for using cash to make
purchases.
At present, less than 10% of vehicle purchases in China are made
with credit, in contrast to more than 70% in developed markets,
analysts say.
BOC Insurance, Dongfeng Peugeot Citroen Automotive Co., and
Peugeot launched the auto financing venture in August 2006.
The venture, with a registered capital of CNY500 million, mainly
offers financing to dealers and to individual consumers. It
reported a net profit of CNY14.55 million last year.
-Rose Yu contributed to this story, Dow Jones Newswires; 8621
6120-1200; rose.yu@dowjones.com
(Patricia Jiayi Ho in Beijing also contributed to this
article.)