Kill two Birds with Only One Stone

2007-8-13

According to insiders, CMBC will probably issue H-share in the 4th quarter of this year or in the next year.

According to experts, if considering only the present business development needs of CMBC, refunding after this private placement will be of little significance. However insiders have expressed that CMBC will need more capital fund for large-scale investment and merging to establish a financial holdings company that is its objective. Issuance of H-share is also based on this consideration.

According to CMBC’s announcement, all of the fund raised this time will be added to the core capital to improve its capital adequacy ratio. The specific usages include appropriating operational fund to branches, acquisition of fixed assets, increasing investment in the field of science and technology, and improving liquidity of assets.

According to insiders, the capital fund raised this time by CMBC will be used in investments and merging of some financial institutions, beside the above purposes.

According to information resources, CMBC has contacted certain local financial institutions to discuss merger and acquisition. At present, except Minsheng Financial Leasing Company that is in construction, CMBC is also actively discussing to merge some local medium-sized and small banks such as commercial banks in some cities. Trust companies and investment banks are the next objects of merger for CMBC. Investment and merging will be the major means to achieve financial holdings. These kinds of investments and merging require large amount of capital fund.

According to CMBC executives, CMBC has not put forward slogans such as “Form a retail bank” that is the current trend，but it has definitely expressed that it will enhance its position among the joint-equity banks for holding the largest market share of corporate business when its retail sales have accounted for 30% of its business revenue through a balanced development. As for the establishment of the financial holdings company, its business won’t cover all kinds of business and fields. It will be focused on improving the corporate business, carry out the planned investments and merging according to the needs of providing overall financial services and creating value chain for customer.

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