Singapore's Temasek brushes off reports of majority shareholding in Minsheng

Singapore's investment arm Temasek Holdings has dismissed reports that it is set to become the largest stakeholder in China's Minsheng Banking Corporation.

The Economic Observer reported on Tuesday that Temasek intended to buy two thirds of 3.5 billion new Minsheng shares at a cost of 8.94 billion yuan (1.12 billion U.S. dollars).

Minsheng, China's first and largest privately owned bank, announced last week an imminent issue of 3.5 billion shares at a minimum price of 3.825 yuan to its strategic investors.

He Qun, a senior Minsheng executive, was quoted as saying that Temasek was one of Minsheng's selected buyers and had shown the greatest interest in the new deal.

But Temasek's spokeswoman on Wednesday told Xinhua that the report was just "market speculation", and would make no further comment.

However, Temasek's subsidiary Asia Financial Holdings (AFH)has been reinforcing its foothold in China's banks.

AFH acquired a 4.55-percent stake in China Minsheng Banking Corp. LTD. in January last year and purchased a 5.1-percent stake in one of the "big four" state commercial banks, China Construction Bank, last August.

AFH also completed a five-percent purchase in the Bank of China (BOC) for 1.5 billion U.S. dollars early this year, though Temasek originally sought 10 percent.

AFH is the seventh largest stakeholder in Minsheng and the fourth largest in China Construction Bank.

Industry observers predict Temasek will get no more than 2.3billion shares in the latest offering as foreign holdings in Chinese banks are restricted by law to less than 20 percent.

The newspaper reported that the final list of buyers would be published on August 8, and that Temasek would be hoping for a different outcome from its BOC bid.

Last August, Temasek and the BOC announced that Temasek would invest 3.1 billion US dollars for a 10-percent stake.

But China's banking authorities overruled the proposal, saying Temasek would own an "unacceptably large stake in China's banks" and restricted it to five percent.

Economic observers said the case reflected a change in the policies of Chinese banks seeking foreign partners.

The government has been encouraging Chinese banks to seek foreign partners to amass capital and improve management, but total foreign holdings are limited to a maximum of 25 percent.

Those limits aim to preserve state control of major lenders, but prospects are improving for foreign investors.

Senior financial economist with the Asian Development Bank Zhang Xuechun said the Chinese banking authority was actively inviting overseas investors as it fully opens the sector to foreign competition late this year, creating opportunities for Temasek to increase its investments.

Source: Xinhua