UOB Buying 15.38% Of Evergrowing Bank

Source : The Business Times, June 27, 2008

$156m stake gives it active participation in Chinese market's growth

AFTER more than a year of talks, United Overseas Bank is finally buying a stake in Chinese lender Evergrowing Bank for 780 million yuan (S$156 million).

UOB said yesterday that it has agreed to subscribe for 15.38 per cent or 260 million shares in the Shandong province bank, subject to approval by China's regulatory authorities. UOB started talks with Evergrowing in May last year.

'The investment in Evergrowing Bank affords UOB an opportunity to participate actively in the growth of the Chinese market,' UOB said in a statement yesterday. 'As a joint-stock bank with nationwide licence, Evergrowing Bank plans to build its distribution network and product capabilities.'

UOB said that as a strategic shareholder it will impart its knowledge, expertise and experience to help Evergrowing Bank enhance its services and products.

Post-subscription, UOB will be the second-largest shareholder in unlisted Evergrowing Bank, after Yantai Electric Power Development.

The purchase will be funded with cash from UOB's internal resources. The investment is not expected to have a material impact on UOB's earnings or net tangible assets in the current financial year.

In conjunction with UOB's subscription, Evergrowing Bank is increasing its issued capital to 1.69 billion yuan.

Set up in 1987, Evergrowing has 81 branches, located mainly in the Yantai region, and in the Chinese cities of Jinan, Qingdao, Nanjing, Hangzhou and Chengdu. Its total shareholders' equity was 1.99 billion yuan and issued capital was 1 billion yuan at the end of last year.

Previously known as Yantai Housing Savings Bank, the bank was primarily involved in the housing credit and settlement business until 2003, when it completed a restructuring exercise, changed its name and became a joint-stock commercial bank.

According to Evergrowing's website, its deposits totalled 65.2 billion yuan and its assets were 107.37 billion yuan at the end of last year.

Besides inorganic expansion in China through mergers and acquisitions, UOB is growing its own franchise there after getting the go-ahead for local incorporation in December last year. This enables the bank to offer the full range of foreign currency and renminbi services to Chinese nationals.

At present, UOB has seven branches and one sub-branch - in the cities of Beijing, Guangzhou, Shanghai, Shenzhen, Xiamen, Shenyang and Chengdu.