HSBC buys 19.9pc stake in Chinese bank
AFP, Beijing
Global banking giant HSBC agreed Friday to pay 1.75 billion dollars to buy a 19.9 percent stake in Bank of Communications -- the biggest single purchase by a foreign investor in China's ailing banking sector. The deal between HSBC and the Shanghai-based lender was announced in a joint press conference held by HSBC and the Bank of Communications (BoComm), China's fifth largest bank. "I think we paid a fair price," HSBC chairman Sir John Bond told reporters at a news conference to announce the deal. Song Feng, spokesperson for BoComm told reporters HSBC paid 1.98 times book value for its stake. In a separate statement, Bond said the investment is "a vital and important step in building our business in China" and represents "a major commitment" for both parties. "In return, we offer the Bank of Communications the opportunity to draw on our international expertise and network," Bond said. HSBC, Europe's largest bank and the world's third largest lender will buy 7.775 billion new shares in BoComm, giving it just below the maximum 20 percent holding any single foreign institution is allowed to have in a domestic Chinese bank. It will become the Chinese bank's second largest shareholder.
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