Middle East funds eye stake in ICBC
(Shenzhen Daily/Agencies)
Updated: 2005-11-14 09:01

The Chinese Government may sell a US$1 billion stake in its biggest bank to Abu Dhabi and Kuwait Government investment funds to help strengthen ties with oil producers, people familiar with the matter said.

State-owned Industrial & Commercial Bank of China (ICBC) is in talks to sell shares to Abu Dhabi Investment Authority and Kuwait Investment Authority, sources said, asking not to be named because an agreement hasn’t been signed.

Abu Dhabi and Kuwait rank outside the 10 largest suppliers of oil to China, where demand for oil has more than doubled in the past decade to make it the biggest consumer after the United States.

Overseas financial institutions committed US$15 billion this year to buy stakes in China's biggest banks, which are profiting from increased borrowing in the world's fastest-growing major economy.

“It makes sense for China to build ties with these countries to diversify their oil supply,’’ said Ambrose Chang, chief investment officer at Daiwa SB Investments HK Ltd. in Hong Kong. “Middle East funds have targeted China as a place for long-term investment.’’

Beijing-based ICBC has more than 100 million customers and 21,223 branches nationwide. Its 6.3 trillion yuan (US$780 billion) in assets as of Sept. 30 represented a fifth of China's total.

Xie Taifeng, a spokesman for ICBC, declined to comment. Abu Dhabi emerging markets investment analyst Sanjeev Doshi didn't return a call seeking comment. Calls to the offices of Kuwait Investment went unanswered.

Yang Kaisheng, president of ICBC, said Oct. 28 that the lender was in talks with two groups of investors to sell a stake before an initial public offering next year. A Goldman Sachs Group Inc. fund, Allianz AG and American Express Co. are seeking to buy 10 percent of the bank for about US$3.1 billion, people involved in the talks said in August.

Kuwait Investment said in July 2004 it might open an office in Shanghai or Hong Kong to study investment opportunities in China, including those in banking and insurance. The fund said five months ago it plans to make investments in the country with UBS AG, Europe's biggest bank by assets.