BBVA finalises doubles stakes deal in Chinese bank

23rd February 2009, Comments 0 comments

In a stark contrast to other foreign institutions which are scaling back their holdings in Chinese banks, Spain’s second-largest bank is doubling its stake in China’s CITIC Bank.

BEIJING – Spain's second-largest bank BBVA has doubled its stake in China's CITIC Bank, the Chinese lender said Monday, in contrast to other foreign institutions that are reducing their investments.

BBVA increased its stake in the Chinese bank to 10.07 percent from 4.83 percent, CITIC Bank said in a statement filed with the Shanghai stock exchange, finalising a deal first announced eight months ago.

"It reflects that the financial crisis has had a relatively limited impact on BBVA and that it still retains some strength," said Wu Yonggang, an analyst with Guotai Jun'an Securities.

"Second, it shows the bank continues to hold a positive outlook of Chinese banks," he told AFP.

The deal was first announced in June 2008, when BBVA said it had agreed to pay EUR 800 million to double its share in CITIC Bank.

It also held a two-year option to buy an additional five percent of the Chinese bank and thus increase its stake to 15 percent, according to the agreement.

The completion of the transaction stood out against the backdrop of the global financial crisis, as a number of foreign lenders are selling off or scaling back their holdings in Chinese banks due to cash shortages at home.

Britain's Royal Bank of Scotland said last month that it had sold its 4.26-percent stake in Bank of China for GBP 1.6 billion (EUR 1.83  billion).

China Construction Bank in January confirmed that major shareholder Bank of America reduced its stake, with reports saying the firm sold USD 2.8 billion' worth of shares in the Chinese lender.

UBS AG, a shareholder of Bank of China, announced in late 2008 that it had sold its entire 1.33 percent stake in the Chinese bank.

BBVA, based in Spain's northern Basque region, posted a net profit of EUR 5.0 billion in 2008, down 18.1 percent from the previous year as the global financial crisis hit its bottom line.

Its 2008 results included a provision of EUR 302 million to cover its exposure to the alleged fraud by US investment broker Bernard Madoff.

AFP / Expatica

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