PING AN CLOSES SHENZHEN COMMERCIAL BANK DEAL

As had been widely expected, China-based assurer Ping An has closed its 4.9bn yuan deal to buy Shenzhen Commercial Bank. Under the agreement, Ping An obtains an 89.24% stake in the commercial bank, which has 36 outlets in southern China. The deal still requires the approval of the China Banking Regulatory Commission. Meanwhile, Ping An is reported to have joined a consortium headed by France’s Société Générale to bid for an 85% stake in Guangdong Development Bank. Economic Observer claimed that Ping An was looking for as much as a 20% stake in the bank, with SocGen, Shanghai-baaed Baosteel and China Petrochemical also looking for 20% stakes. Citibank is also looking to gain control of Guangdong Development Bank. Although the bank has a nationwide banking licence, it also has a poison pill in the form of a large bad-debt portfolio, with a non-performing loan ratio of about 25% in 2005, compared with a nationwide average of 8%. A 20% stake for Ping An would cost about $5bn, dwarfing the Shenzhen deal.