Banking News
- Shanghai News
Date: 29-Mar-2007 Sources: (Xinhua Online)
United Commercial Bank, a leading U.S. bank serving the Chinese people and American companies doing business in China, said it will acquire Shanghai's Business Development Bank (BDB) for 205 million U.S. dollars, the latest foray by a foreign bank into China's lucrative banking sector.
The U.S. bank has signed agreements to acquire 100 percent of the Shanghai-based BDB in the 205-million dollars cash transaction, its holding company UCBH Holdings Inc said in a statement.
Shanghai-headquartered BDB, established in 1992 as China's first wholly foreign-owned bank, has offices in Beijing, Guangzhou and Shantou.
The small bank, which focuses on China's booming small- and medium-sized enterprises (SMEs), had 217.2 million dollars in assets, 188 million dollars in loans and 25.5 million dollars in deposits as of Dec. 31.
BDB will operate as a subsidiary of United Commercial Bank under the UCB brand, UCBH said.
The transaction, which is still pending Chinese and U.S. regulatory approvals, is expected to close in the fourth quarter, the statement said. The deal, if approved, will make UCB the first U.S. community bank to buy a bank operating in China.
'The proposed acquisition of Business Development Bank provides UCB with an immediate and well-organized infrastructure to accelerate the implementation of our China strategy,' Thomas S. Wu, chairman, president and CEO of UCBH Holdings Inc, said in a statement.
San Francisco-based UCB, Wu said, is anticipating significant growth in its commercial banking and trade finance business after the acquisition as his bank is targeting U.S. companies doing business in China.
'Over the next three years following this acquisition, we plan to add two to three more branches in other strategic locations in China, which will enhance our capabilities to tap into China's market potential, particularly the SMEs, for even greater trade finance opportunities,' Wu said.
BDB, in which Europe's leading development finance institution DEG and Thailand-based global conglomerate Chroen Pokphand Group have stakes, is licensed to conduct foreign-currency business with foreign-invested enterprises and individuals, as well as domestic enterprises and individuals in China.
The privately owned bank is also allowed to conduct local-currency business with foreign-invested enterprises and foreign individuals in China.
The bank will apply for an expanded license to conduct a full range of local-currency business, UCBH's statement said.
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