| BOC may sell stake to security fund |
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| Friday,November 25,2005 Posted: 15:39 BJT(0739 GMT) China Daily |
Bank of China is in preliminary talks to sell part of its stake to the nation's social security fund as the lender moves to list overseas next year, state media said yesterday.
The National Social Security Fund is also planning to spend US$700 million to US$800 million to purchase equity in the Industrial & Commercial Bank of China, sources said.
China has been stepping up efforts to boost financial strength at domestic lenders by injecting funds and wiping out bad loans.
China Construction Bank and Bank of Communications, the country's No. 3 and No. 5 lenders, raised a cumulative US$11.4 billion in initial public offerings this year. The issues were oversubscribed as investors want access to the mainland's banking industry and the country's huge household savings.
Both ICBC and BOC, China's biggest and No. 2 lenders, are finalizing strategic investors and plan to issue stock overseas next year.
Wang Zhaowen, a BOC spokesman, declined to comment yesterday. Officials at ICBC and the social security fund were not available to comment.
The country's welfare fund last year bought 14 percent of Bank of Communications for 10 billion yuan (US$1.2 billion).
The fund may use another 8 to 10 billion yuan to buy stakes in the country's big four banks, its Chairman Xiang Huaicheng said last month.
China's social security fund, which manages about 192.1 billion yuan worth of assets, covers social security obligations of residents on the mainland. It usually invests in low-yield bank deposits, treasury bonds and stock and bonds on mainland bourses.
The pension fund's interest in BOC may derail a plan by Singapore's Temasek Holdings Pte to buy 10 percent of the Chinese bank for US$3.1 billion yuan, the 21st Century Business Herald reported, without citing it source.
Temasek has yet to gain approval from BOC's state shareholder Central Huijin Investment Corp to purchase the stake, the Chinese bank's vice president Li Zaohang said last week.
Industry sources said Central Huijin, an investment arm of China's central bank, was worried Temasek's investment may destabilize the banking system as the company has already bought stakes in CCB and China Minsheng Banking Corp.
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