Singapore’s DBS Bank has emerged as the biggest shareholder in Shenzhen Rural Commercial Bank (深圳农商行), becoming the first foreign strategic investor to grab a major stake in a smaller Chinese lender in a decade.
DBS Bank, a wholly owned subsidiary of DBS Group Holdings Ltd, has obtained a 13% stake in Shenzhen Rural Commercial Bank Corporation, becoming its largest shareholder following a private placement.
DBS Group Holdings Ltd previously announced on 20 April that DBS Bank had entered an agreement to subscribe for a 13% stake in Shenzhen Rural Commercial Bank Corporation for a consideration of 5.286 billion yuan (approx. USD$813.38 million).
Zhou Kunping (周昆平), an analyst from Bank of Communications (BOCOM), said to Securities Daily that overseas strategic investors play a major role in improving the corporate governance of Chinese banks, as well as introducing advanced management and technology.
Shenzhen Rural Commercial was established in 2005 as a non-listed commercial bank headquartered in Shenzhen, where it has an extensive presence with 210 branches, more than 3,600 staff, and over 2,100 automatic teller machines.
40% of Shenzhen Rural Commercial’s loans are from its retail banking operations, and the remaining 60% from enterprise banking operations that primarily target small and medium-sized enterprises in the Shenzhen area.
As of the end of 2020 Shenzhen Rural Commercial’s assets had reached 519 billion yuan, with a deposit balance of 404 billion yuan, and net profits of 4.8 billion yuan.
The deal arrives amidst efforts by DBS Bank to drive further growth of its operations in the Greater Bay Area of Guangdong province, Hong Kong and Macau.