Citic Bank Agrees to Buy Stake in Affiliate for $1.8 Billion

Citic Bank Agrees to Buy Stake in Affiliate for $1.8 Billion


May 11 (Bloomberg) -- China Citic Bank Co. will pay HK$13.6 billion ($1.8 billion) for a 70.32 percent stake in an affiliate as part of consolidation by parent China Citic Group, the nation’s biggest investment company.

The purchase in cash of Citic International Financial Holdings Ltd. is subject to shareholders’ approval, Beijing- based Citic Bank said in a statement to the Hong Kong stock exchange today. Banco Bilbao Vizcaya Argentaria SA, Spain’s second-biggest bank, owns the balance of Citic Financial.

The parent company bought out Citic International’s minority shareholders last year as part of plans to consolidate its financial operations. Shares of Citic International were de- listed in Hong Kong Nov. 5.

Citic Bank, 62.3 percent owned by Citic Group, said last month first-quarter profit fell 23 percent to 3.2 billion yuan ($470 million) on higher provision against bad loans. President Chen Xiaoxian said April 29 the bank’s lending growth may slow in the remaining three quarters of the year, after soaring in the first quarter.

Shares of Citic Bank have gained 51 percent in Hong Kong this year, compared with a 21 percent rise in the benchmark Hang Seng Index. Citic Group was established in 1979 by former Chinese Vice Premier Rong Yiren to attract foreign capital as the nation began free-market reforms.

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