Goldman Sachs Group Inc ended a seven-year investment in Industrial & Commercial Bank of China Ltd (ICBC, 中國工商銀行) by selling a US$1.1 billion stake in the world’s largest lender by market value, a person familiar with the matter said.
The US bank sold 1.58 billion shares in ICBC at HK$5.50 each, the person said, asking not to be identified as the information is private.
That is a 2.5 percent discount to ICBC’s closing price on Monday in Hong Kong trading.
The Beijing-based bank fell 1.8 percent to HK$5.54 at 1:04pm, paring its gain for the past year to about 19 percent.
The Wall Street firm joins Citigroup Inc and Bank of America Corp in cutting holdings in China as new capital rules known as Basel III make it more expensive to hold minority stakes in banks.
Goldman Sachs has reaped about US$12 billion in sales proceeds and dividends from its US$2.58 billion investment in ICBC, calculations by Macquarie Capital Securities Ltd show.
New rules set by the Basel Committee on Banking Supervision require punitive capital deductions for holding minority investments in other financial institutions.
Goldman Sachs’ Tier 1 common ratio was about 12.7 percent under Basel I and an estimated 9 percent under Basel III, chief financial officer Harvey Schwartz said last month.
Citigroup sold its entire stake in Shanghai Pudong Development Bank (上海浦東發展銀行) in March last year, nine years after buying it, for an after-tax gain of US$349 million. Bank of America sold 10.4 billion shares of China Construction Bank Corp (中國建設銀行) in November 2011 for a profit of about US$1.8 billion, its fourth sale, leaving it with a 1 percent stake.
Global financial firms, including Temasek Holdings Pte, invested US$33 billion in Chinese lenders from 2001 to 2009, according to the regulator. They still own at least US$45 billion of stakes in local banks, data compiled by Bloomberg show.
Since acquiring the stake in ICBC in 2006, Goldman Sachs has recorded US$3.47 billion in net gains on the position, according to company filings through the first quarter of this year.
As of March, Goldman Sachs had a US$1.11 billion position in ICBC on its own balance sheet, down from US$2.08 billion at the end of December last year because of a sale in January, according to the firm’s 10Q filing with the US Securities and Exchange Commission.