Banking

ICBC announces plan to privatize, delist its HK unit

(Xinhua)
Updated: 2010-08-11 08:49

HONG KONG - Hong Kong-listed ICBC, or Industrial and Commercial Bank of China, on Tuesday announced a proposal to privatize and delist its subsidiary ICBC Asia, which is also listed at the Hong Kong stock exchange.

In a joint statement filed with the Hong Kong exchange, the Beijing-based ICBC, which owns about 72.81 percent of ICBC Asia's issued share capital, said it proposed to buy the other 27.19 percent of public shares at HK$29.45 ($3.8) per share.

That represented a premium of about 27.77 percent over the closing price of HK$23.05 per share as quoted on the Hong Kong stock exchange on the last trading day on July 27, said the statement.

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ICBC said it believed the price of HK$29.45 represented a premium to the prices at which the market had valued ICBC Asia and has reflected the potential value of the development of the business of ICBC Asia in the next few years, it said.

The total cost of ICBC's plan to privatize ICBC Asia amounted to HK$10.83 billion, which ICBC said would be funded from its internal resources.

The proposal will facilitate business integration between ICBC Asia and ICBC, and will provide ICBC with greater flexibility to support the future business development of ICBC Asia, said the statement.

As the business scale of ICBC Asia is expected to continue to develop in the next few years, its capital requirements may need to increase correspondingly and the listing status of ICBC Asia will limit the flexibility of ICBC in providing additional capital to ICBC Asia, it said.

In addition, the listing requires ICBC Asia to bear listing- related costs and expenses, and if the privatization is successful, these costs and expenses can be saved, according to the statement.

ICBC, which is also listed in the Shanghai stock market, is currently the world's top listed bank with the highest market capitalization.

While ICBC Asia, based in Hong Kong, has 44 retail branches, 10 wealth management centers and 4 commercial business centers in Hong Kong, and an overseas branch in the Cayman Islands. It is the listed flagship of the Hong Kong banking business of ICBC.

Also according to the joint statement, ICBC intended to continue the core business of ICBC Asia in banking and financial services after successful privatization. ICBC Asia will also actively expand its client base and business in China in the future.

In case that the proposed privatization be not successful, ICBC Asia will continue to carry on its core businesses in banking and financial services.

While at the same time, ICBC Asia may need to consider increasing its capital through methods which are feasible under its existing shareholding structure and implementing measures to satisfy its future business needs, said the statement.