UBS to buy stake in BoC

A customer walks out of a China Construction Bank (CCB) ATM branch yesterday in Beijing. Credit Suisse is reported to be eyeing a US$500 million stake in the bank, which is expected to launch its massive public share sale on Oct. 27 or 28 in Hong Kong. PHOTO: AFP

UBS, Switzerland's largest bank, said yesterday it was acquiring a US$500 million stake in Bank of China (BoC), which is China's second-biggest bank, as part of a strategic partnership between the two.

The two are forming a mutually beneficial strategic cooperation covering the development of investment banking and securities products and services in China and for Chinese clients.

The deal is subject to Chinese regulatory approval.

1.6 percent stake

A spokesman said UBS expected the deal to close by the end of this year.

Following the deal, UBS's stake in BoC will be around 1.6 percent.

The announcement came ahead of BoC's planned initial public offering (IPO) next year, for which UBS is lead manager.

Royal Bank of Scotland, Merrill Lynch and the Li Ka-shing Foundation agreed earlier this year to acquire 10 percent in BoC for a combined US$3.1 billion.

UBS said in June that it was in talks with BoC and that it might invest up to US$500 million.

The cooperation and investment will "cement the long-standing relationship between Bank of China and UBS," the Swiss bank said in a statement.

They will be preferred partners in various investment banking and related securities business areas in China and for Chinese clients, and in addition will cooperate in operational matters relating to these business areas.

Credit Suisse and CCB

Swiss rival Credit Suisse, meanwhile, was reported to be eyeing a US$500 million stake in China Construction Bank (CCB).

CCB, the third largest of China's "big four" lenders, is expected to launch its massive public share sale on Oct. 27 or 28 in Hong Kong, state press reported yesterday.

CCB was expected to place US$2 billion worth of shares with institutional investors starting from yesterday at the latest, according to the official China Securities Journal, which cited market sources.

CCB is expected to raise more than US$6 billion in all via its IPO, although a report by the Hong Kong Standard said the bank could raise as much as US$7.7 billion, making it the biggest IPO in the territory.