ICBC puts Arab investor talks on hold

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Industrial and Commercial Bank of China, the country’s largest lender, has frozen talks with two Arab state investors negotiating for a $1bn stake, amid growing concern in Beijing over foreign involvement in the country’s financial sector.

People close to the situation said the state lender, which is considering a $10bn-plus overseas listing, wants to seal a $3bn deal to sell a 10 per cent stake to a consortium led by Goldman Sachs before entering detailed discussions with Abu Dhabi and Kuwait’s state investment agencies.

ICBC, the largest bank by assets in Asia outside Japan, opened talks with the Middle Eastern investors a few weeks ago, triggering speculation that a deal would help China’s quest for energy resources in the oil-rich region. However, it is now believed to want to postpone any agreement until next year.

The decision may signal a slowdown in the listing plans of ICBC, which has more than 20,000 branches and accounts for about 20 per cent of China’s banking system.

The lender has not invited investment banks to bid for the coveted advisory mandate – a move that was expected at the beginning of this month.

“There appears to be a revised timetable – first, the Goldman’s deal, then the appointment of bankers, and then the talks with the Arab investors,” said a person familiar with the situation.

ICBC’s decision to stagger talks with different groups of investors comes amid a dispute between Chinese authorities over whether foreign institutions, including Bank of America and Royal Bank of Scotland, bought stakes in other “big four” state banks too cheaply.

The internal criticism prompted Zhou Xiaochuan, China’s central bank governor, to mount a spirited defence of the deals with foreign lenders in an interview with a local financial magazine published on Monday.

ICBC signed an outline agreement with the consortium of Goldman Sachs, Germany’s Allianz and American Express in late August, but regulators have still to approve the deal.

That delay is seen by some industry observers as a further sign of the authorities’ concerns.

The new timetable will not necessarily scupper ICBC’s original plans to list next year but could mean that Bank of China will become the second of the big four to list on international capital markets.

China Construction Bank, the country’s second largest lender, raised $9.2bn in a Hong Kong listing this month.

ICBC could not be reached for comment.

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