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Allianz, Amex retain ICBC stake

(China Daily/Agencies)
Updated: 2009-10-21 08:26

ICBC shares have risen nearly 55 percent this year on the Hong Kong bourse. An Xin

Allianz SE and American Express Co plan to keep their Industrial & Commercial Bank of China Ltd stakes, which have a combined value of about $3.1 billion, past a lockup on the holdings that expired yesterday.

Allianz and American Express have no immediate plans to sell, the companies and Beijing-based ICBC said in statements. Allianz has 3.22 billion Hong Kong-traded ICBC shares, worth HK$19.9 billion ($2.57 billion), while American Express owns 638 million shares with a value of HK$3.95 billion.

The agreement "is an indication that key shareholders are optimistic about ICBC's business and growth potential and will lend some support to its shares", said Victor Wang, an analyst at UBS AG in Hong Kong who rates ICBC a "buy".

ICBC is the world's biggest bank by market value and profit. It has more than 16,000 outlets nationwide, 112 branches overseas, and 190 million individual customers -- equivalent to the combined populations of Japan and France.

The Beijing-based bank's profit may rise 16 percent to a record 128.4 billion yuan ($18.81 billion) this year, according to analysts surveyed by Bloomberg.

ICBC shares advanced 2.4 percent to HK$6.34 yesterday in Hong Kong trading, taking this year's gain to 55 percent.

Reevaluating holdings

"In case of a potential disposal in the future, Allianz will explore all potential methods of sale that would maximize value and minimize market impact, with a preference for a private sale to investors," the companies said.

American Express "will reevaluate its shareholding from time to time depending on market conditions" and "has no current plans to sell its shares", ICBC and the New York-based company said in a separate statement.

Allianz would have a profit of $2 billion and American Express a $400-million profit if they sold their stakes, bought in April 2006, at the current market price.

Goldman Sachs Group Inc, Allianz and American Express purchased a total of 24.2 billion shares in ICBC at that time for about $3.8 billion, six months before the Chinese bank's initial public offering. They agreed to hold half their shares for three years, and the remainder for six months more.

Previous sale

Munich-based Allianz, Europe's second-biggest insurer by market value, and American Express immediately sold half their original investments in ICBC after the first lockup period ended on April 28. Goldman Sachs extended the period it must hold 80 percent of its stake to April 2010 under a revised agreement. The New York-based bank sold some of its ICBC shares in June.

Allianz, which booked a gain of 658 million euros on the sale of the first half of its stake in ICBC in the second quarter, has provided the bank with expertise in asset and risk management, while American Express issued co- branded credit cards with the Chinese lender.

Related readings:  Allianz, AmEx sell down ICBC stakes for $1.9 billion  Allianz: No plans to sell more ICBC shares come October  Allianz, American Express cut stakes in ICBC

"Our partnership with ICBC offers a platform for expansion in our strategic growth market China and gives us access to a huge number of Chinese customers," said Christoph John, a Singapore-based spokesman at Allianz.

Chinese banks "offer probably the clearest earnings visibility" for 2010 among the nation's major industries, JPMorgan Chase & Co analysts led by Samuel Chen wrote in an Oct 11 report. They forecast 32 percent average earnings growth for Chinese lenders next year, driven by loan expansion and a recovery in lending profitability.