Citigroup to take a smaller stake in Chinese bank
Citigroup will accept a smaller stake in China's Guangdong Development Bank after failing to convince Beijing to allow the bank to take a 40% share, media reports have suggested.
China allows foreign investors to buy up to 19.9% of a bank, but Citigroup was interested in a much larger share. The New York-based bank was leading a group of foreign and domestic investors in a bid to acquire an 85% stake in Guangdong Bank. Citigroup is keen to own the largest stake, in order to exert significant control over the running of the bank. US private equity firm Carlyle Group was also planning to take a 9% stake, but will also have to reduce this to conform to the rules. Foreign investors can have a maximum combined stake of 25%. Guangdong officials have told the bank that it will need to reorganize the deal in order to keep within the investment limits. Citigroup may look for more local partners willing to invest in order to proceed, but even with the reduced stake the bank will still have effective control. It is thought the New York outfit will pay around $700 million for a stake.
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