CBA Maintains Stake In Chinese Lender By Subscribing To Equity Follow On

Post by NeilMc on August 19, 2009 · Under Business News, Capital Markets, Company News, Mergers & Acquistions, banking, news · Comment

Australian banking major, Commonwealth Bank of Australia, has maintained its stake in Chinese lender, Bank of Hangzhou, by taking part in its equity raising and paying up to $165 million for new shares.

Prior to the capital raising, CBA held a 19.9 per cent stake, which will remain the same after the follow on offer, and falls just below regulatory threshold of allowable foreign investment by a single entity.

The Sydney based lender will subscribe to 20 per cent of the total number of new shares on offer in order to maintain its stake at its current level. CBA will pay $2.30 per share and make a total investment in the region of between $160 million and $165 million, the lender said in a statement.

Bank of Hangzhou, based in Zhejiang province on China’s eastern seaboard is raising fresh capital to fund future expansion and increases its capital adequacy ratio, in anticipation of new regulatory requirements which the state regulator the China Banking Regulatory Commission (CBRC) plans to introduce.

CBA acquired its initial stake for in the Chinese lender for $100 million in 2005. Hangzhou has 79 branches and 2448 staff. CBA also owns 20 per cent of Qilu Bank and has its own representative offices in Beijing and Shanghai.

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