CIMB gets nod to sell Bank of Yingkou stake

CIMB Bank's logo on a building in Kuala Lumpur. CIMB Bank is unit of the CIMB Group Holdings Bhd. (Photo taken by Hafidz for Star Online use.)

KUALA LUMPUR: CIMB Group Holdings Bhd has received the green-light from China’s banking industry regulator to divest its 18.21% equity interest in Bank of Yingkou Co Ltd (BYK).

CIMB Group told Bursa Malaysia that the China Banking Regulatory Commission, through its letter dared Sept 26 (Tuesday), approved its 99.99%-owned indirect subsidiary CIMB Bank Bhd’s stake sale to Shanghai GuoZhiJie Investment Development Co Ltd for 1.507 billion yuan (RM958.68mil) cash, about 1 times the price-to-book value.

CIMB Bank entered into a share transfer agreement on Dec 30 last year to divest 391.4 million shares in BYK - the leading commercial bank in Yingkou City, Liaoning Province - to Shanghai GuoZhiJie Investment Development.

In addition, CIMB Group inked a long-term collaboration agreement with BYK for both entities to continue working together in areas of staff exchanges, product development, training and sharing of market intelligence.

CIMB Group bought a 19.99% stake in BYK in 2009, paying 348.8 million yuan (RM221.74mil) or about 1.58 times the price-to-book value. At that time,  a single foreign investor could not own more than 20% of a local bank in China.

CIMB Group chief executive Tengku Datuk Seri Zafrul Aziz, commenting on the disposal, had said: “Since our entry in 2009, this investment has yielded an internal rate of return of 17.4% and a money multiple of 3.3 times.

“However, capital requirements for minority investments in other banks such as this has continued to increase, so much so that in time, the returns threshold required to justify this investment will be too high.”