China Mobile May Buy Shanghai Bank Stake

(Caixin Online) China Mobile Ltd. has started talks with Shanghai Pudong Development Bank Co. to buy a stake in the bank, according to a statement by the telecom operator. A time table for the sale has not been set. 

The Shanghai-based bank said on February 25 that it was seeking strategic investors. The lender suspended the trading of its shares from February 26 and the trading will resume by March 4.  

Last year, Chinese banks lent a total of 9.59 trillion yuan to prop up the economy, lowering capital adequacy levels at most banks. Shanghai Pudong Development Bank's core capital adequacy dropped below the 7% minimum requirement set by banking regulators.

Guotai Junan Securities said last week that China Mobile will hold 20 percent of the bank's enlarged capital after the planned sale, through which the lender can raise up to 40 billion yuan.

When the transaction is completed, the bank's core capital adequacy level will be boosted by 4 percentage points to over 10 percent.  

(Translated by SHX)