Money

Citi, China Life invest more in Guangdong bank

(Agenices)
Updated: 2010-12-03 11:05

Citigroup and China Life have fully participated in the $2.2 billion rights issue of Guangdong Development Bank, maintaining their leading stakes in the Chinese lender, China Life said on Friday.

The world's biggest life insurer by market value had invested an additional 3 billion yuan ($450 million) in Guangdong Development Bank, maintaining its 20 percent stake, while Citigroup also kept its holdings at that level through buying newly-issued shares.

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The move would "increase our overall investment returns, improve our asset-liability structure and help maintain our interest in the bank," China Life said in a statement to the Shanghai Stock Exchange.

"It would also benefit long-term development of Guangdong Development Bank, and promote cooperation between banks and insurers."

Guangdong Development Bank, which sold controlling stakes to Citigroup, China Life and several other strategic investors in a restructuring in 2006, is preparing for an initial public offering as soon as next year, after turning itself into a profitable business from an insolvent government-controlled lender.

The Guangdong-based bank said in April that it would issue new shares to raise up to 15 billion yuan to boost its capital, with existing shareholders entitled for 2.858 additional shares for every 10 held at 4.38 yuan apiece.

Guangdong Development Bank made a profit of 3.39 billion yuan in 2009, while its capital adequacy ratio stood at 8.98 percent at the end of last year, compared with a regulatory minimum of 8 percent.