Citi wants to sell China Guangfa Bank shares

Citi wants to sell China Guangfa Bank shares, China Life intends to take over

 Citigroup plans to sell off its shares in China Guangfa Bank, and China Life Insurance, the “big brother of life insurance” in China, may be interested in taking over. According to market news yesterday, Citibank is negotiating with investors including China Life Insurance and CITIC Trust and intends to transfer its 20% stake in China Guangfa Bank to the latter. If the transaction is completed, China Life will hold a total of 40% stake in Guangfa Bank and become the largest shareholder of the latter.

 A market analyst told this reporter, “China Life has been planning to have its commercial bank seek a full license, and this time may become an opportunity.”

 China Life seeks banking license

 Citigroup is in talks to sell its 20 percent stake in China Guangfa Bank, a deal that could be reached in the next few months, including China Life Insurance Co. and Citic Trust Co., Ltd. Interestingly, China Life is in contact with several banks, hoping to eventually acquire a bank, in addition to the above-mentioned China Guangfa Bank, as well as Hua Xia Bank and so on. However, the incident has not received an official response from the above-mentioned agencies.

 It is reported that the acquisition plan is operated by China Life Group, not a listed company, and it is less likely to complete the acquisition through the secondary market.

 A person close to China Life said that it is more likely that China Life will eventually acquire China Guangfa Bank, and its shareholding ratio may reach 40% to 60%.

 Some market participants pointed out that Citigroup had a lot of troubles when it bought the shares of China Guangfa Bank. In November 2006, a consortium headed by Citigroup fought off two consortiums headed by Societe Generale and Ping An in China Guangfa Bank’s investment war and won 85.6% of the shares of China Guangfa Bank. In addition to the Citi group, members of the consortium include China Life Insurance, CITIC Trust, and State Grid Yingda International Holdings Group Co., Ltd., a subsidiary of State Grid Corporation of China. Today, these four companies each hold 20% of the shares of China Guangfa Bank and are tied for the largest shareholder.

 Data from China Life’s annual report last year showed that its bancassurance decreased by 27,000 last year, which was also the largest decline since China Life’s A-share listing in 2007. In addition to China Life, China Taiping’s bancassurance outlets decreased by 2,197 last year, while Ping An increased slightly by 3,941.

 “Being able to truly control a commercial bank is a good choice for China Life.” Industry analysts said that China Life’s holding of Guangfa Bank can obtain a banking license, which is a good thing for its bancassurance business and asset management business.

 Bancassurance cross-selling is on the rise

 Industry insiders said that insurance institutions have begun to expand into other fields, and it is an inevitable trend to acquire banks and securities, because whether it is property insurance, life insurance, or future health insurance, the capital cycle is relatively long, and it is relatively proactive in allocation.

 The reporter learned that the insurance licenses of large state-owned banks have been in the pockets one after another, and mixed operation has become a trend. The performance of such insurance companies with banking backgrounds is also aggressive. Some analysts said that insurance companies with such bank shareholders have strong channels and shareholder backgrounds, and their premiums have rapidly grown in the past three years. But the disadvantage is that the channel is too single, and the individual insurance channel is relatively weak. (Reporter Zhou Hui)

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