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Bank 'in talks' to buy into S. African lender

By Hu Yuanyuan (China Daily)
Updated: 2008-04-04 13:57

One of the nation's major State-owned banks is in talks to buy a stake in South Africa's second largest lender FNB, a source told China Daily.

"The bank, a State-owned one, has been negotiating with FNB for a long time, but it's unlikely to take a stake as high as ICBC's in Standard Bank," the source, who declined to be named, said.

The banking regulator approved ICBC's acquisition of a 20 percent stake in South Africa's Standard Bank in February. ICBC paid $5.6 billion for the stake - the biggest overseas investment by a Chinese firm and the biggest foreign investment in Africa.

Analysts said China Development Bank (CDB) is the most likely lender to be negotiating for the stake.

"Given CDB's heavy investment in Africa's infrastructure sector and its role in fueling Chinese enterprises to go global, the bank in talks with FNB is probably CDB," Wu Yonggang, an analyst with Guotai Junan Securities, said.

CDB, one of the country's three policy banks, paid $5 billion for a stake in United Bank for Africa early this year. It is one of the four largest banks in Nigeria.

As the second largest bank in South Africa, First National Bank has branches throughout South Africa and also has subsidiaries in Swaziland, Botswana and Namibia.

Celine Ko, an international banking specialist with Johannesburg-based FNB, told China Daily that the bank plans to open a representative office in Shanghai this year to help finance trade between China and South Africa.

China is now South Africa's second largest source of imports after Germany and its sixth largest export market. Bilateral trade has developed over the past decade from a negligible figure to $9.86 billion in 2006, the Ministry of Commerce said.

"Compared with mature markets such as the US and Europe, exploring emerging markets is a more realistic choice for Chinese banks," Ma Xuguo, deputy general manager of the global market department of ICBC, said.