Fri, May 23, 2003 - Page 11 News List

Newbridge sues Chinatrust over Chinese bank

BLOOMBERG , SHANGHAI

Newbridge Capital Ltd, which failed to buy control of Shenzhen Devel-opment Bank Co, is suing China-trust Commercial Bank (中國信託銀行) for allegedly interfering in the talks, the Asian Wall Street Journal reported, citing a court document.

San Francisco-based Newbridge accused Chinatrust of telling Shenzhen Bank shareholders the private equity fund planned to sell its shares in the Chinese bank soon after buying them, the court document, which was filed in Texas on May 20, alleged.

Shenzhen Bank, the smallest of China's publicly traded lenders, disbanded a committee set up with Newbridge to oversee its management after government shareholders, with a combined 18.2 percent stake in the Chinese lender, halted the sale. Newbridge said it had a binding agreement with the shareholders and would proceed with its purchase plan.

Chinatrust is considering buying a stake in Shenzhen Bank, China's Caijing magazine reported earlier, without citing anyone. Shan Weijian, a managing director at Newbridge, confirmed the suit, the report said.

Shan wasn't immediately available for comment.

Shenzhen Development said it has not received any bids from Chinatrust or other investors.

"We haven't been approached by Chinatrust or any foreign investors other than Newbridge," said Wang Xin, a bank spokesman.

"Neither are we aware that Newbridge filed a lawsuit against Chinatrust," Wang said.

Xiao Suining, the chief negotiator representing the four government shareholders of Shenzhen Bank, denied that Chinatrust has indicated an interest in buying non-tradable shares in the bank.

Chinatrust spokeswoman Lin Shiaw-pin (林孝平) was not immediately available for comment.

Newbridge was in discussions to buy the combined stake, held by Shenzhen Investment Management Co, Shenzhen International Trust & Investment Co, Shenzhen Social Security Administration Bureau and Shenzhen City Construction Development Group Co, for almost a year.

Shenzhen Bank offered New-bridge a presence in management, along with a balance sheet that has more than one in 10 loans overdue.

Rival Shanghai Pudong Development Co sold a 5 percent stake to Citigroup Inc for 600 million yuan (US$72.5 million) in December.

Shenzhen Bank, which employs more than 5,800 workers in 198 outlets nationwide, reported earnings fell 17 percent in the first quarter of this year to 153.3 million yuan.

The bank's non-performing loan ratio to total advances rose 1.48 percentage points to 11.8 percent at the end of March.

The bank made a provision of 3.2 billion yuan at the end of last year, less than a third of problem loans totaling 9.76 billion yuan. Total assets stood at 162.5 billion yuan at the end of March.

"Whether the deal goes through or fails won't have any impact on our determination and efforts to im-prove the bank's operation, management and asset quality by introducing foreign strategic shareholders and adopting international practices," Wang said.

Chinatrust had consolidated profit of NT$11.76 billion (US$339 million) last year and expects earnings to rise 28 percent this year. The banking unit of Chinatrust Financial Holdings Corp (中信金控) set up its first representative office in Beijing in March.

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