China's largest bank buys stake in South Africa's Standard Bank
According to a statement issued by ICBC, actual acquisition has been by means of the issue of targeted new shares to ICBC by Standard Bank tantamount to 10% of enlarged share capital, at R104.58 per share and by ICBC's purchase of a proportional amount of shares equal to 10% of enlarged share capital, from existing shareholders at a price of R136 per share. ICBC will own 20% share capital of Standard Bank when the deal is concluded.
The ICBC statement says South Africa is the largest and strongest economic entity in Africa, and go on to say that on a regional basis, Standard Bank has a long history, and is the largest commercial bank in South Africa or Africa as well. It says the bank is Africa's leading bank in asset terms, reaching R1.0879 trillion (US$162 billion) by the end of the first half of 2007. In terms of Tier 1 capital, it says Standard Bank is the top bank in Africa and the 106th in the world. Today, the bank boasts 1051 branches in 18 African countries and around key financial centres of Europe, America and Asia. Among various business areas that the bank covers include retail banking, corporate and investment banking, and life insurance.
In 2006, the bank achieved a net profit of R12.51 billion (US$1.86 billion), or 25.5% of return on share capital in average. Furthermore, the bank's quality asset has kept its rate of non-performance loan under 1.5% for three years continuously. Standard Bank went public on the Johannesburg Stock Exchange in 1970 and had a market capitalization well over R144.7 billion (US$21.5 billion) on October 22, 2007.
ICBC is the largest China mainland lender with total assets standing at US$1.1 trillion. At the end of its 2006 financial year, the bank ranked the seventh in the world's bank list by gross capital and as of now, the largest with its market capitalization in excess of US$300 billion. ICBC has 16807 domestic branches and 98 overseas subsidiaries.
The statement says that ICBC and Standard Bank dovetail neatly as both own a huge network of branches and a strong base of quality customers. Both banks will join forces in sharing customer and network resources and work closely in the areas of international settlement, trade financing, trades of funds, and investment portfolio.
"Strategic cooperation between ICBC and Standard Bank means two largest commercial banks, in China and in Africa, are partnering in tow", ICBC Chairman Jiang Jianqing said.
"We hope this is a bridge between China and South Africa, a bridge between Asia and Africa. Through our tactical alliance with Standard Bank, ICBC will step up its efforts in streaming its deployment of assets around the world to give our customers far superior cross-border financial services, to create even higher return to our shareholders. This agreement is definitely of economic interest to both parties, as well as a catalyst to cement the economic and trade ties between China and Africa."
The transaction has yet to be adopted by the two banks' own shareholder meeting and South Africa's jury on agreement transfer and requires the approval of all regulatory bodies concerned: China Banking Regulatory Commission, South African Reserve Bank and South African Banking Registry.
