The government of China’s southern city of Guangzhou is seeking to sell 20 per cent stake in the Bank of Guangzhou to a foreign investor for $850 million, a person with knowledge of the matter said.
Bank of Guangzhou, the city’s seventh-largest lender, has allowed due diligence by potential buyers, including Groupe BPCE, France’s second-largest bank by branches, and the Bank of Nova Scotia, Canada’s third-largest lender, the source said on condition of anonymity.
Since 2006, foreign investors have announced plans to inject more than $16 billion into Chinese banks as the country’s GDP more than doubled. In May, Frankfurt-based Deutsche Bank AG said it would spend about $811 million to boost its stake in Huaxia Bank to 19.99 per cent.
“This can be seen as a unique opportunity for a well-capitalized foreign bank to get immediate exposure to China’s banking system,” said Michael Werner, a Hong Kong-based analyst at Sanford C Bernstein & Co. “The question is how many foreign banks have healthy enough capital positions to consider this purchase.”
