China’s biggest banking group said that its acquisition of Standard Bank’s London subsidiary is part of its global business drive. (Photo : Reuters)
Standard Bank announced on Monday that it had completed the sale of a majority stake in U.K.-based subsidiary Standard Bank Plc to Industrial and Commercial Bank of China (ICBC).
Located in London, Standard Bank Plc is the international commodities and foreign exchange arm of South Africa's Standard Bank Group, one of the largest banks in South Africa.
"The acquisition of Standard Bank Plc is important for ICBC to proactively deal with this demand," ICBC chairman Jiang Jianqing said in an official statement.
According to the U.K. Financial Times, the ICBC is set to pay $690 million for a 60-percent stake in the company, making it the first major state-owned Chinese financial institution to set up significant trading operations in London.
The price is $75 million or 10 percent less than Standard Bank, Africa's largest banking group by assets had initially said when it formally announced the deal the previous year. The lowered price tag is speculated to be caused by a fall in the subsidiary's net value, as well as from the South African bank's exposure to the aluminum being held at ports in China's Shandong Province as part of a fraud inquiry by Chinese authorities.
The banking group has previously written down $80 million for the aluminum, while the Standard Bank Plc has about $160-million exposure to the impounded metals. The group also said it has provided its subsidiary with capital worth $300 million this month to "address losses incurred." It also added that the group will keep the right to any net recoveries from the exposure.
ICBC's recent acquisition is seen by analysts as part of its plans to follow Chinese clients around the world. The state-owned bank previously bought a 20-percent stake worth $5.5 billion in Standard Group in 2007.
In contrast, Standard Bank has been recently scaling down its worldwide operations, laying off employees and selling its stakes in overseas assets. In 2011, the bank sold its majority shareholding in Standard Bank Argentina to ICBC for $600 million.
"China and Africa have an increasingly important shared role in the future of the global economy," David Munro, CEO of corporate and investment banking at Standard Bank, said to the press.
Munro added: "This partnership brings together ICBC's financial and global reach, with Standard Group's deep expertise in Africa, to the benefit of our mutual and prospective clients."
