ICBC buys 20 percent stake in Standard Bank

• to develope ties with Africa as a potential source of energy, raw materials and markets for China's booming economy.

Beijing - China's biggest bank, the Industrial and Commercial Bank of China, (ICBC), on Feb 3 said it has received approval to buy a 20 per cent stake in South Africa's Standard Bank, the largest commercial bank in Africa, for USD 5.46 billion. It is one of China's biggest foreign corporate acquisitions to date.

The strategic acquisition helped ICBC to become the top shareholder of the Johannesburg-listed Standard Bank, which has 1,501 branches with presence in 18 African countries and major financial centres in Europe, North America and Asia.

Beijing is encouraging Chinese companies to invest abroad in what it calls a "go global" strategy to diversify the economy and take advantage of international opportunities. The deal sets a n example of developing ties with Africa as a potential source of energy, raw materials and markets for its booming economy.

The deal, already approved by shareholders of both banks and regulators in South Africa, received the green signal from the China Banking Regulatory Commission, ICBC officials said.

Listed in Shanghai and Hong Kong, the ICBC overtook Citigroup in July 2007 as the world's biggest bank by market capitalization. It is flush with cash to pay for foreign expansion after raising a record-setting $21.9 billion in an initial public stock offering in October 2006.

Pan Gongsheng, an ICBC executive in charge of the bank's merger and acquisition business, had also indicated that, as part of its global hunt, ICBC is looking at American financial institutions, battered by the sub-prime mortgage crisis, "if such a deal facilitates our strategic development."

The bank still eyed buying a 19.3 per cent stake in Thailand's ACL bank, even though Bangkok Bank postponed the sale, set for the end of 2007.

ICBC agreed to acquire a controlling stake in Indonesia's Halim Bank in December 2006 and Macao's Seng Heng Bank in August 2007.

(The Hindu, AP)