Move means infusion of managerial, marketing know-how for State lender
Postal Savings Bank of China (PSBC), the nation's sixth-largest commercial bank by assets, has raised 45.1 billion yuan ($7.03 billion) from a 16.92 percent stake sale to 10 strategic investors, the bank announced in a statement on Wednesday.
The investors include six international financial institutions such as UBS Group AG and DBS Group; two State-owned enterprises (SOEs) - China Life Insurance Co and China Telecom Corp - and two domestic Internet companies, Alibaba Group Holding's financial affiliate Ant Financial and Tencent Holdings.
PSBC said this is the largest private placement ever by a Chinese financial institution.
Cooperation between PSBC and these investors will cover a range of areas including channel expansion, customer development, product innovation, risk management, technical support and human resources development, PSBC said.
The investors expressed great confidence in the cooperation.
"Our strategic partnership with PSBC is a strong endorsement of the firm's long-term commitment to China, a market where we see tremendous growth potential," Nicolas Aguzin, CEO for JPMorgan, Asia-Pacific was quoted as saying in a statement the company sent to the Global Times on Wednesday.
"International financial institutions have rich managerial experience, which is also one of the major reasons that Chinese companies hope to cooperate with them," Lu Qianjin, an international finance professor at Fudan University, told the Global Times on Wednesday. "PSBC's move will help the bank to become more market-oriented."
Although PSBC lags commercial banks in China in terms of market orientation, it still has great advantages in its wide network in rural areas, Lu said, noting that the money the bank raised could be used in business transformation or improving corporate governance.
As of September, PSBC had more than 40,000 branches around the country with total assets reaching 6.8 trillion yuan, the bank said.
PSBC President Lü Jiajin was quoted as saying in the statement Wednesday that the bank hopes to learn from large companies' experience and technology, continue the upgrading of its retail business, expand its corporate business and undertake innovation in its financial markets business.
"PSBC's move is also a quick response to the government's call for mixed-ownership reforms," Li Chang'an, a professor at the University of International Business and Economics in Beijing, told the Global Times on Wednesday.
In September, China issued guidelines to accelerate SOE reforms. The guidelines urged shareholding reforms in all SOEs, under which private investors can participate in an SOE's business through investing, acquiring shares or buying debts, the Xin-hua News Agency reported.
"Private investors such as Alibaba can participate in this reform, which is the highlight of the cooperation between PSBC and its strategic investors," Li said.
Previously it was rare for private capital to invest in domestic financial institutions, Li said, noting that private investors are reluctant to invest in SOEs as they have concerns that they will not be treated equally in corporate management.
In recent years, some large private-sector companies have shown their growing advantage in certain sectors, which has convinced more SOEs to cooperate with them, Li noted.
PSBC also realizes the importance of cooperating with companies like Alibaba to achieve "the organic integration of online and off-line resources and solidify and strengthen our leading advantages in inclusive finance," the bank said in its statement.
In particular, Ant Financial and PSBC have great development potential in rural finance and micro-finance, read a statement Alibaba sent to the Global Times on Wednesday.
But Li also noted that it was important for SOEs to treat all investors equally.
"Private investors should have equal rights in management and deciding business strategies," he said.
PSBC also plans to go public eventually, but the bank hasn't disclosed a timetable.
