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Fri, Nov 03, 2006 - Page 10 News List

Chinese regulator denies Citibank purchase report

AP AND AFP , BEIJING

China's banking regulator yesterday denied a report that Citigroup Inc has won approval to buy control of a Chinese bank in a US$3 billion deal.

No bid for the Guangdong Development Bank (廣東發展銀行) has been approved by regulators, said Liu Mingkang (劉明康), chairman of the China Banking Regulatory Commission. He was speaking to reporters at a banking conference in Beijing.

Liu denied a report late on Wednesday by the state Xinhua news agency that Citigroup had won a bidding war with French bank Societe Generale and China's second-largest insurer, Ping An Group (平安集團).

"It's false. It's misleading," Liu said of the report. "We haven't gotten any application" for the sale of Guangdong Development Bank.

Chinese banks have sought out international lenders as strategic investors to get both money and management skills as Beijing gradually opened the industry to foreign competition.

Bidding for the Guangdong bank has been unusually heated because a takeover would offer the rare opportunity for a foreign investor to win management control of a mid-size Chinese bank.

Earlier reports said Citigroup was seeking 40 percent of Guangdong Development Bank as part of a consortium that would buy 85 percent of the bank. Societe Generale and Ping An Group were making a similar offer.

It wasn't clear how those bids would deal with government rules that limit total foreign investment in a Chinese bank to 25 percent and any single foreign investor to a 20 percent stake.

Societe Generale insisted again yesterday that it was still in the running to buy Guangdong Development Bank, rejecting reports it had been beaten to the prize by Citigroup.

"Regarding these new rumors, they are false again," Societe Generale said in an e-mail statement. "So many rumors, denials and so much time spent to reach a decision are jeopardizing the future of Guangdong Development Bank."

Societe Generale said in its statement that Guangdong Development Bank's staff had been in "complete uncertainty" about their future for a year now.

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