ICBC to buy Standard Bank stake for $5.6 billion

By George Chen and Marius Bosch

SHANGHAI/JOHANNESBURG (Reuters) - China's biggest lender ICBC (1398.HK) is to buy 20 percent of South Africa's Standard Bank (SBKJ.J) for $5.6 billion in cash, the biggest foreign acquisition by a Chinese commercial bank yet.

The move announced on Thursday -- which will also be the largest foreign investment in Africa -- comes as Beijing encourages major state firms to expand abroad, particularly in developing countries.

"This acquisition will help to build a foundation for ICBC to become a global bank," Chairman Jiang Jianqing told reporters in Beijing.

Industrial and Commercial Bank of China said earlier in a statement buying a stake in Standard Bank, Africa's biggest banking group by assets, would enable it to capitalize on the growth prospects in Africa's largest economy.

"ICBC believes the best method of capturing these growth opportunities is through a strategic alliance with a large South African bank with significant operations on the African continent," ICBC said.

The stake purchase is the biggest foreign investment yet in Africa, according to Dealogic data.

Standard Bank Chief Executive Officer Jacko Maree said the transaction was put together in 45 days after initial talks first started two years ago.

"We think it (the ICBC investment) is an enormous vote of confidence in South Africa and in Africa," Maree said at a presentation on the transaction in Johannesburg.

The deal will give Standard Bank access to the world's fastest-growing economy, further enhance its capital base and boost the bank's ability to facilitate and finance trade flows between Africa and Asia, Maree said.

ICBC is buying an equal mix of new shares to be offered by the South African bank and existing stock from shareholders at prices that equate to a 15 percent premium to Standard Bank's average stock price in the 30 trading days to October 23.

AFRICAN BUSINESS

China has been pouring money into resource-rich Africa, welcomed by some, but drawing criticism from Western aid groups, who say the country is turning a blind eye to misrule and corruption. China argues it is spreading prosperity in the world's poorest continent where the West failed.

"ICBC is buying into Standard Bank because Chinese companies are swarming to Africa to do business. We want to boost our financial services such as trade finance to Chinese clients there," a source familiar with the matter told Reuters.

Johannesburg-based Standard Bank operates in 18 African countries and 21 other countries across the world.

Its shares -- suspended pending the announcement -- jumped 6.05 percent to a record high of 117.70 rand on the news after trade resumed. Standard Bank shares have gained 23.4 percent so far this year. South Africa's rand currency also strengthened over 1 percent against the dollar on the news.