Watch VideoPlay Video
Ping An Insurance has officially announced its plan to purchase shares of Shenzhen Development Bank. In a newly issued statement, China's second largest insurer gives details about the merger.
According to the statement, Ping An Insurance will pay about 29 billion yuan to buy 1.6 billion shares of the Shenzhen-based lender, raising its holding to 52 percent from 30 percent. The deal will also make Ping An a controlling shareholder. The insurer says the merger will be positive for both sides.
Sheng Ruisheng, Spokesman of Ping An Insurance said "If the deal goes well, our banking business will be improved. Coordination between financial services and banking will be strengthened. We will be able to provide more professional services to our customers."
Shenzhen Development Bank says Ping An will inject its whole banking unit into the company, boosting the lender's net assets and capital. After the merger, the insurer will no longer hold shares of Ping An Bank.
Xiao Suining, Chairman of Shenzhen Development Bank said "Shenzhen Development Bank and Ping An Bank have a similar loan structure and the bad loan ratio is maintained at a lower level compared with other banks. If the merger goes well, asset quality will be improved as well as profitability. A better development is ahead."
Analysts say gaining control of Shenzhen Development will enable Ping An to boost banking to one third of the company's revenues and facilitate cross-selling insurance.
- Ping An to up stake in Shenzhen bank 2010-09-02