Temasek seeks $2.4 billion with China bank stake sales

HONG KONG Wed May 2, 2012 7:16pm EDT

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HONG KONG (Reuters) - Temasek Holdings TEM.UL is selling about $2.4 billion worth of stakes in two of China's largest banks, as the Singapore state investor reshuffles its financial sector portfolio.

Temasek, which is the single-biggest shareholder in Standard Chartered Bank plc (STAN.L), is offering about $1.2 billion in Hong Kong-listed shares of China Construction Bank (0939.HK) and another $1.2 billion of Bank of China (3988.HK), according to term sheets seen by Reuters.

The Singapore investor manages about $150 billion in assets, spread across a sprawling investment business of some 200 companies, though just 30 or so make up 80 percent of the portfolio's value, leading some critics to say the company should trim down and be more focused.

Temasek confirmed the sales, but declined to give details.

Hong Kong's financial sector sub-index .HSHFI has risen about 15 percent this year, recovering from last year's 27 percent slide.

The sell downs come just days after China's Big Four banks wrapped up their first quarter earnings, which showed that the sector faced growing pressure from a slowing economy and rising funding costs.

IFR first reported Temasek's sell-down plans.

Temasek, which translates as "sea town" in Malay, was burned by its financial industry exposure in 2008 as stakes in large European and U.S. banks plunged in value because of the turmoil in global markets. But it has kept nearly 40 percent of its investment portfolio in banks it feels are strong and are capturing emerging market growth.

Temasek's Fullerton Financial Holding is offering about 3.08 million shares in Bank of China in a range of HK$3.13-HK$3.18, or a discount of 4 percent to 2.5 percent to Wednesday's close.

Two Temasek subsidiaries based in Mauritius offered about 1.6 billion shares in CCB in a range of HK$5.99-HK$6.10 per share, or a discount of 2.8 percent to 1 percent to Wednesday's closing price.

Bank of America Merrill and Morgan Stanley (MS.N) are joint bookrunners on the two block deals, the term sheets showed.

The Singapore state investor has been shuffling its portfolio fairly regularly.

About two weeks ago, Temasek bought a $2.3 billion stake in Industrial and Commercial Bank of China (1398.HK) from Goldman Sachs (GS.N). In February it sold $300 million worth of shares in India's No. 2 lender ICICI Bank (ICBK.NS).

Just a month ago, Temasek agreed to swap its controlling stake in Indonesia's Bank Danamon (BDMN.JK) to boost its stake in DBS Group Holdings (DBSM.SI) as part of DBS's $7.2 billion takeover of Bank Danamon.

In July it cut its stakes in Bank of China and CCB, calling the moves a "portfolio rebalancing," only to increase the stake in CCB a month later. It further boosted its CCB holding in November, buying shares from Bank of America Corp (BAC.N).

(Additional reporting by Kevin Lim in SINGAPORE; Editing by Elaine Hardcastle and Helen Massy-Beresford)

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