Ping An Insurance (Group) Co, China's second-biggest insurer, is to pay 29.1 billion yuan (US$4.3 billion) for a controlling stake in Shenzhen Development Bank, a medium-sized lender, to consolidate its banking arm.
Shenzhen-based Ping An will pay 2.69 billion yuan in cash and hand over control of its banking unit, Ping An Bank, to Shenzhen Development in exchange for a 22.4 percent stake.
Ping An Group will raise its stake in Shenzhen Development to 52.39 percent while Shenzhen Development will hold 90.75 percent of Ping An Bank after the deal.
The banks said the deal is integration, not merger. However, Shenzhen Development could merge the two banks in the future, according to company filings. Ping An has already sent its senior managers to Shenzhen Development.
The deal, pending regulatory approval, is expected to be completed this year.
Trade finance, retail banking and credit card business, which Ping An is building up rapidly, are among the priorities that the bank will continue to grow after the consolidation, Xiao Suining, chairman of Shenzhen Development said yesterday.
The deal will give Shenzhen Development a network of another five branches and more than 70 outlets.
