PSBC kick-starts plan to boost cof­fers

Bank brings in 10 strate­gic in­vestors to aug­ment cap­i­tal ahead of pos­si­ble pub­lic float

China Daily (Canada) - - LIFE - By JIANG XUEQING jiangx­ue­qing @chi­nadaily.com.cn

Postal Sav­ings Bank ofChina Corp Ltd, the sixth-largest com­mer­cial lender in China by as­sets, said onWed­nes­day that the China Bank­ing Reg­u­la­tory Com­mis­sion has ap­proved the bank’s plan to raise as much as 45.1 bil­lion yuan ($7 bil­lion) from 10 strate­gic for­eign and do­mes­tic in­vestors ahead of a pos­si­ble ini­tial pub­lic offering.

The lender said it will sell a 16.92 per­cent stake to a group of in­vestors, rang­ingfrom­global fi­nan­cial in­sti­tu­tions to do­mes­tic In­ter­net gi­ants, upon com­ple­tion of fund-rais­ing.

With this, PSBC has also changed its cor­po­rate gov­er­nance struc­ture by switch­ing from a sin­gle share­holder to mul­ti­ple share­hold­ers. Till date, China Post Group, the coun­try’s of­fi­cial postal ser­vice, is the sole in­vestor in the lender.

“PSBC will op­ti­mize its cor­po­rate gov­er­nance mech­a­nism to im­prove the ef­fi­ciency and qual­ity of oper­a­tions… We’ll also take ac­tive mea­sures to make a busi­ness tran­si­tion, as the tra­di­tional busi­ness model of Chi­nese banks is fac­ing chal­lenges from in­ter­est rate lib­er­al­iza­tion, the in­ter­na­tion­al­iza­tion of ren­minbi and in­ten­si­fied com­pe­ti­tion with on­line fi­nan­cial ser­vice providers,” said Lyu Ji­a­jin, pres­i­dent of the bank.

Among the new strate­gic in­vestors are: Swiss fi­nan­cial ser­vices com­pany UBS AG, United States in­vest­ment bank JPMor­gan Chase & Co, Sin­ga­pore’s sov­er­eign wealth fund Te­masek Hold­ings Pte, Chi­nese tele­com firm China Tele­com Corp Ltd, In­ter­net gi­ant Ten­cent Hold­ings Ltd and Ant Fi­nan­cial Ser­vices Group, the In­ter­net fi­nance af­fil­i­ate of Alibaba Group Hold­ing Ltd.

PSBC said it would use the money from the stake sale to aug­ment its cap­i­tal base. Some of the in­vest­ments will be made in US dol­lars, thus help­ing the bank de­velop its in­ter­na­tional busi­ness and sup­port the global ex­pan­sion of Chi­nese com­pa­nies, said Lyu.

The strate­gic in­vestors, how­ever, will not hold a large stake in PSBC. Sin­ga­pore­based DBS Bank Ltd has agreed to in­vest ap­prox­i­mately 1.55 bil­lion yuan to ac­quire less than 1 per­cent stake in the bank. China Life In­sur­ance Co Ltd will hold no more than 5 per­cent of the bank’s en­larged is­sued share cap­i­tal.

Lyu said PSBC hopes to ac­cel­er­ate the up­grade of its re­tail busi­ness, the ex­pan­sion of its cor­po­rate busi­ness and the in­no­va­tion of its fi­nan­cial mar­ket busi­ness by learn­ing from the ex­pe­ri­ence and tech­nolo­gies of in­vestors like UBS and JPMor­gan.

It also looks for­ward to strength­en­ing its strate­gic lay­out in ar­eas like In­ter­net fi­nance and in­clu­sive fi­nance by draw­ing on the ex­per­tise and in­flu­ence of in­vestors like Ant Fi­nan­cial and Ten­cent.

“We have made a pack­age of plans for co­op­er­a­tion in terms of chan­nel ex­pan­sion, client dis­cov­ery, prod­uct in­no­va­tion, risk man­age­ment, tech­ni­cal sup­port and hu­man re­sources de­vel­op­ment,” he said.

Zeng Gang, di­rec­tor of bank­ing re­search at the In­sti­tute of Fi­nance and Bank­ing at the Chi­nese Acad­emy of So­cial Sci­ences, said PSBC move is seen as a pre­cur­sor to its prepa­ra­tion for an IPO.

“By in­tro­duc­ing mul­ti­ple strate­gic in­vestors, the bank will es­tab­lish a mod­ern, com­mer­cial­ized cor­po­rate gov­er­nance mech­a­nism. The cap­i­tal in­jec­tion will help the bank sus­tain rapid growth, which is hard to achieve with a sin­gle in­vestor.”

Ni­co­las Aguzin, CEO for JPMor­gan, Asia Pa­cific, said: “Through our part­ner­ship with PSBC, we are re­assert­ing our long-term com­mit­ment to China, a mar­ket where we see tremen­dous growth po­ten­tial. We be­lieve the coun­try’s fi­nan­cial mar­ket re­forms will un­der­pin fu­ture eco­nomic de­vel­op­ment while also con­tribut­ing to greater eco­nomic sta­bil­ity.”

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