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Focus on Long-Term Investment, China Life and Ping An Jointly Exploring Gold from CMBC

2007-8-13

 

Before investing in CMBC, Ping An has conducted strategic investment into Shenzhen Commercial and Ping An Bank, why this time chose CMBC? “Investing into CMBC is a win-win action, it is worthy from both perspectives of current price and future earnings,” said Zhuang Han, general manager assistant of Ping An Asset Management Company, “Ping An is strong in corporate business, the quality of its business clients is the best among the joint-stock commercial banks”; meanwhile, investing into banking shares is a requirement for Ping An to diversify investment and asset placement.

Will China Life and Ping An enter into the Board of CMBC? An executive of CMBC indicates that currently the Board of CMBC has 18 members, according to the “Company Law”, a Board cannot have more than 19 members, therefore it is unlikely to add more Board members. Moreover the fourth Board was structured last year, and its tenure is 3 years, it is unlikely to adjust Board members before expiry.   　　

　　“It is not necessary to become a Board member for a shareholder to play a role,” said an executive of CMBC.

　　CMBC plans to establish a financial holding company

After private placement brought huge amount of capital to CMBC, the problem of capital adequacy ratio was solved smoothly. Industry insiders believe that after the key constraint for business development is eliminated, CMBC will keep rapid growth in several years to come. It is anticipated that in the next stage it will be more active in expanding market shares through acquisition.　　

Fanhai Holdings Group that has also participated into the subscription believe that after the collected RMB 18.16 billion is in place, CMBC’s core capital will be reinforced, and its capital adequacy ratio enhanced; as planned part of capital will be invested to bond assets with higher liquidity; at the same time it will be engaged in repurchase of bonds and inter-bank lending.  　　

Regarding the future development of the company, an executive of CMBC revealed that according to the five year plan of the company, CMBC is planning to initiate the incorporation of China Minsheng Financial Holdings Company with CMBC as a key founder to implement diversified operational and development strategy. CMBC will be the principal subsidiary and business entity for the financial holdings company. Through mergers and acquisitions or other means, the financial holding company will have one or two subsidiaries engaging in other financial sectors, such as securities, funds, derivative products investment, insurance, trust, and financial leasing etc, developing Minsheng Group into a comprehensive financial group. 
  
In the field of M&A, CMBC will choose targets according to overall development strategy, through merging and acquiring two to three small and medium-sized banks like credit cooperatives and rural commercial banks etc to expand the scale of retail business, network and client base of commercial bank; through cooperating with the selected strategic investor to introduce advanced business process and management technology, vigorously developing SME business. Meanwhile part of the capital collected this time will be invested into some financial institutions for M&A.    

 

 

 

 

 

 

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