Ping An mulls SDB privitization plan
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Shenzhen Development Bank (SDB) suspended stock trading Wednesday until a restructuring plan is finalized with Ping An Bank, a subsidiary of China's second largest insurer, Ping An Insurance Group.
SDB also posted separately Wednesday on the Shenzhen Stock Exchange the resolution of its board members to appoint Richard Jackson, former head of Ping An Bank, as its president.
Ping An Insurance Group is now SDB's largest shareholder with about 30 percent of the bank's shares.
Ping An's next step is to merge Ping An Bank with SDB to get around regulations against operating with two bank licenses, Beijing Business Today reported Wednesday citing Sun Jian, vice chairman of Ping An Group.
"It's more likely that SDB acquires Ping An Bank, " said Wu Songkai, banking sector analyst with Huatai United Securities.
But doing so, SDB needs to issue more shares to Ping An Group for the buyout, so that the in-surance provider can have a stake of 50 percent or more.
It is easier to get the regulator's approval in a shorter period of time by doing so, Wu said.
The current shareholders of SDB wouldn't benefit much from the deal due to decreased earnings per share in short term, he said in the report.
Ping An Group wouldn't be willing to give up Ping An Bank to develop SDB instead, said Hu Yaokun, financing & banking partner of Adfaith Management Consulting.
Ping An Insurance Chairman Ma Mingzhe emphasized the group's strategic target of "separate business operations under group control, and listing as a whole" Wednesday in Shenzhen.
Hu believes that Ping An will most likely privatize SDB first and merger it with Ping An Bank, and integrate assets into the already listed Ping An Group.
Ping An Insurance Group had been trying to hold equities in a bank with nationwide networks, but lost to Citigroup in a bid to acquire stakes of Guangdong Development Bank in 2006.
The group aims to have banking accounting for 30 percent of profits in eight to 10 years.
Currently the insurance business contributed to more than 60 percent of the group's profit, and banking plus investment only takes up less than 20 percent.
