Regulators approve Guangdong purchase

19 December 2006

Chinese banking sector regulators have formally approved the Citigroup consortium's purchase of an 85.6 per cent stake in Guangdong Development Bank.

According to a statement on the China Banking Regulatory Commission's (CBRC) website, the deal giving Citigroup itself a 20 per cent share of the Chinese lender was approved on Monday, making completion imminent.

Although this marks a significant success for the consortium in the newly-opened Chinese financial market, regulators have warned that the new owners will now face the challenge of turning around the fortunes of the bank, which has not performed as well as other major lenders in mainland China.

"Guangdong Development Bank's reorganization still has a large amount of work to do," the CBRC said.

"The investors should continue to make great efforts to turn it into an internationally competitive, modern commercial bank."

Along with Citigroup, IBM is also taking a 4.74 per cent stake in Guangdong as the other foreign investors involved in the deal, with Chinese investors making up the rest of the consortium.

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