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HSBC signs agreement to acquire 19.9 per cent of Bank of Communications Limited
6 August 2004
The Hongkong and Shanghai Banking Corporation Limited, a wholly-owned subsidiary of HSBC Holdings plc, has entered into an agreement to acquire a 19.9 per cent interest in the share capital of Bank of Communications Limited for a cash consideration of RMB14,461 million (approximately US$1,747 million). This transaction represents the largest single equity investment in a mainland China bank by a foreign bank.
Bank of Communications is China’s fifth largest bank with total assets of US$111.9 billion at 31 December 2003. It is one of only 15 commercial banks with a national banking licence, giving it the ability to operate without geographical restrictions. Headquartered in Shanghai, the bank has over 2,700 branches and outlets across 137 of the wealthiest cities in mainland China.
The completion of the transaction is subject to various conditions including obtaining regulatory and other approvals. The consideration will be satisfied from the HSBC Group’s internal resources.
As part of the transaction, HSBC will also enter into separate agreements to provide technical assistance and services to Bank of Communications as well as to co-operate strategically with the bank on its credit card business in mainland China.
Chairman of HSBC Holdings plc, Sir John Bond, said: “This investment represents a major commitment for both parties: HSBC and Bank of Communications. For HSBC, this investment provides the Group with a new window for developing our business in China. In return, we offer Bank of Communications the opportunity to draw on our international expertise and network. This investment is a vital and important step in building our business in China.”
Jiang Chaoliang, Chairman of Bank of Communications Limited, said: “This agreement with HSBC represents the largest single equity holding and investment so far in a Mainland bank by a foreign bank. While Bank of Communications has obtained its first overseas strategic co-operation partner, HSBC has gained a stake in China’s largest joint stock commercial bank. This transaction offers a mutually beneficial relationship between two strong banks.”
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