China Minsheng Banking Corp will acquire up to 20 per cent of UCBH Holdings Inc, the biggest bank serving the Chinese community in the US.
BEIJING: China Minsheng Banking Corp, the country's 7th largest bank by market value, will acquire up to 20 per cent of UCBH Holdings Inc, the biggest bank serving the Chinese community in the United States, media reports said on Tuesday.
The deal would be the first strategic investment in a US bank by a Chinese mainland financial institution and give UCBH a stronger exposure to the mainland market.
According to a Minsheng statement, the stake purchase will be divided into three phases, Minsheng will initially buy 5.4 million shares for USD 96 million, representing a 4.9 per cent stake. Before March 31, 2008, the bank will increase its ownership to 9.9 per cent. And by June 2009, it may increase its holding to 20 per cent, becoming the largest single shareholder in UCBH.
"The stake purchase will serve as Minsheng's platform to explore the overseas market," a banking analyst with Orient Securities, Gu Junlei said.
"The acquisition will have limited impact on Minsheng's financial status, given the portfolio in the bank's total assets," Gu said.
However, as 77.16 per cent of UCBH's loans are related to the real estate business, the bank's returns largely depend on the US property market, Gu was quoted by 'China Daily'.
UCBH, the holding company of United Commercial Bank, has USD 10.7 billion in assets and 70 branches in the US and one in Hong Kong, with quite a number of its clients foreign citizens of Chinese origin.
It plans to use the proceeds from the initial sale for a pending acquisition in China which will be closed in the fourth quarter, a UCBH statement said.
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