France's Societe Generale fights for Chinese bank

13th September 2006, Comments 0 comments

BEIJING, Sept 13, 2006 (AFP) - Societe Generale said Wednesday China had yet to pick a winner in the drawn-out battle for troubled Guangdong Development Bank being fought by US-based Citigroup and the French banking giant.

BEIJING, Sept 13, 2006 (AFP) - Societe Generale said Wednesday China had yet to pick a winner in the drawn-out battle for troubled Guangdong Development Bank being fought by US-based Citigroup and the French banking giant.

Societe Generale's chief of communications for the Asia-Pacific region, Laurent Tison, told AFP he did not believe a decision had been made and any final ruling would follow a carefully established protocol.

Tison said he thought a decision was "very close" and "favorable for us" but a six-member committee was still perusing the deal.

The committee, made up of members from China's central bank, its banking regulator and Guangdong province officials, would then submit final recommendations to China's State Council, or the cabinet.

A source close to the deal also told AFP that there was "no final decision but there is a lot of pressure."

However, on Tuesday, a source at Guangdong Development Bank had said the cabinet had given the nod to a consortium led by Citigroup to buy into the lender, beating out the Societe Generale-led bidders.

Citigroup was to take a 19.9 percent stake after it had upped its offer, said the source at Guangdong bank, refusing to provide more details.

It this were true, it would pave the way for Citigroup to open up exclusive negotiations with Guangdong Development Bank.

At the beginning of August, the chairman of the French bank, Daniel Bouton, had declared that Beijing would make its decision on September 20.

"This date is still valid," the source close to the deal said.

Societe Generale and Citigroup have been in an 18-month battle for control of the troubled southern Chinese lender, which holds a much-coveted national banking licence.

The offer from Societe Generale and its partners, including Chinese petroleum giant Sinopec and top steelmaker Shanghai Baosteel Group Corp, amounted to about 3.0 billion dollars, including 600 to 650 million dollars from the French bank.

Official newspapers have reported that the Citigroup consortium -- which includes China Life Group, the nation's largest insurer, and State Grid Corp, the major electricity distributor -- had offered slightly more than 3.0 billion dollars for an 85 percent stake in Guangdong Development Bank.

The Carlyle Group, a private Washington-based investment firm, pulled out of the bidding group, Chinese press reports said Tuesday.

A Citigroup spokeswoman based in Shanghai declined to comment Wednesday.

The deal has attracted more attention than usual because it appeared Beijing might make an exception and allow a foreign party to take outright control of a Chinese bank as part of a wider liberalization of the financial sector.

Current regulations limit total foreign interest in a Chinese bank to 25 percent, with a single overseas investor allowed no more than 20 percent.

Societe Generale's Tison said the French bank had at one stage asked for 24 percent of the bank before revising the offer to 20 percent. Citigroup had been seeking between 40 to 50 percent, he added.

In the event, the Chinese authorities appear to be sticking with their existing rules on foreign ownership despite being obliged to open up the industry under its World Trade Organization obligations.

China remains nervous about selling equity in its state banks amid fears that foreign institutions could gain an upper hand in a sector it deems strategic.

Copyright AFP

Subject: French news

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