IFC Takes Stake in Minsheng Bank
International Finance Corp., the investing arm of the
World Bank, has taken a 1.6 percent stake in Minsheng
Bank, China's largest privately-owned bank. This is the
first investment by a foreign entity in a privately owned
Chinese bank. The investment was approved by the powerful
China Banking Regulatory Commission (CBRC).
IFC has also bought stakes in the Bank of Shanghai, Nanjing
City Commercial Bank and Xian City Commercial Bank, which
are all government owned. IFC's strategy is to promote
corporate governance and other reforms within the banks
by acquiring equity stakes. Chinese officials hope that
foreign equity participation in Chinese banks will improve
their performance and make them more competitive.
Many Chinese banks are planning listings in either Hong
Kong or New York. Domestically, they are facing competition
from non-Chinese banks as they prepare to enter the Chinese
bank as part of China's terms for joining the World Trade
Organization. Citibank, Deutsche Bank and Goldman Sachs
will manage the listing, which would be the first by a
Chinese bank on overseas markets. Approval of the IFC
stake in Minsheng by the CBRC seems to mean a green light
for the overseas listing by the Chinese authorities. Minsheng
has total assets of 250 billion yuan, and net profits
will reach 1.2 billion yuan this year.
As part of its purchase, IFC will acquire a board seat.
Two other leading shareholders, the Orient Group and the
New Hope Group, both private companies, already sit on
Minsheng's board. IFC plans to invest in other Chinese
companies in order to improve corporate governance.
Before you go, did you like this article?
If so, you can receive a free email newsletter version
each weekday. Sign up using the China Business Express
form on this page.
