BEIJING (XFN-ASIA) - China Merchants Bank has turned away foreign strategic investors, including Japan's Bank of Tokyo-Mitsubishi, and may forgo cornerstone investors in an up to 15.5 bln hkd initial public offering in September, The South China Morning Post reported, citing people familiar with the bank's plans.
'The bank feels like it has the brand to go it alone,' one source was quoted as saying in the Hong Kong paper.
China Merchants, widely regarded as one of the better-run banks in the mainland's troubled financial industry, walked away from an up to 300 mln usd investment from the Bank of Tokyo-Mitsubishi due to business and political concerns, the report said.
Sources told the paper that bank chairman Qin Xiao had said the bank was not interested in strategic investors but that did not stop it from looking at offers from foreign financial institutions.
China Merchants was wary of just how much help Bank of Tokyo-Mitsubishi could provide in tightening its risk management systems given the track record of high levels of bad loans in the Japanese banking system for many years, the source said.
The bank will decide by next month whether to offer shares to preferred investors or not, the report said.
Many of the bank's managers believe China Merchants could attract enough overseas funds on its own, sources said.
The smaller size of China Merchants' share sale relative to the 9 bln hkd IPO of Construction Bank and the 11 bln hkd Bank of China offering also discouraged sales to strategic investors as the bank would want a diversified base of shareholders.
The Shenzhen-based bank plans to offer 2.2 bln shares, or 15 pct of its share capital.
(1 usd = 7.8 hkd)
virginie.mangin@xinhuafinance.com
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© 2006 AFX News
