BEIJING China Minsheng Banking Corp SS> , the country's first private lender, said on Thursday it is planning to buy more overseas rivals, in particular in Europe, as part of its strategy to boost its global business.
But the Shanghai-listed bank said its long-delayed plans for a Hong Kong listing to help fund its expansion plans could be further postponed after failing to settle on pricing.
Speaking to Reuters on the sidelines of China's top political advisory meeting in Beijing, its chairman Dong Wenbiao said Minsheng Bank was in the market to buy banks that have existing branch networks in Hong Kong and Europe, though he did not disclose any potential targets.
"I think it's a right time to make overseas acquisitions right now," said Dong, adding foreign assets are relatively cheaper than previously while investors may be overly worried about the economic impact from the U.S. credit crisis.
"We are very keen to expand our business in some developed markets, especially Hong Kong and Europe, through acquisitions," said Dong.
Last October, Minsheng Bank agreed to buy 9.9 percent of San Francisco-based UCBH Holdings for more than $200 million in the first strategic investment by a mainland Chinese bank in a U.S. bank.
Dong said his bank would not acquire other U.S. banks after the UCBH deal, which would give Minsheng access to UCBH's more than 60-branch network across the United States.
HONG KONG IPO DELAYED
To support its fast business expansion, the bank plans to float shares in Hong Kong this year or next, hoping to raise about HK$15 billion ($1.9 billion), and will also issue some convertible bonds and subordinated bonds this year in the domestic market to boost its capital base, Dong said.
Minsheng has been considering a Hong Kong IPO for several years and had most recently hoped to list in the first half of 2008, according to sources in October. It had first looked to list in Hong Kong as early as the first half of 2004.
"If we cannot find a good price for our IPO, then we will not launch it in a hurry," he said, adding that its Shanghai-listed local currency A shares were undervalued.
"We have a clear strategy and plans to support our business growth and I think our share price are absolutely undervalued by investors at present," said Dong.
Minsheng trades at 30.5 times forecast earnings, versus Merchants Bank at 33.7 times and Pudong Development Bank at 19.9 times. Minsheng shares have fallen close to 20 percent in the last six months as part of a broader correction in China's stock market.
After a series of fund-raising activities including the planned Hong Kong IPO, the bank's capital-adequacy ratio will be boosted to at least 14 percent from around 9 percent now, versus the minimum regulatory requirement of 8 percent, Dong said.
"When we want to expand in an overseas market, we prefer acquisitions which can allow you to access the market much faster than setting up an office there on your own," said Dong.
He said Minsheng Bank would in particular like to buy mid-sized European banks.
SHARE PRICE UNDERVALUED
China's central bank had decided to cap new loans of Minsheng Bank, founded by several Chinese private businessmen in 1996, at about 90 billion yuan this year, similar to its loan quota given by the government in 2007, Dong said.
Chinese top banking regulator Liu Mingkang said on Wednesday that Beijing would keep its tight monetary policy unchanged this year to curb the country's rising inflation to too cool down some overheated sectors.
Dong said the bank will try to explore many other new profit streams this year to retain its profit growth such as overseas acquisitions, fund management and insurance services.
The bank is also looking at some options to acquire smaller domestic rivals to boost its national network, Dong said.
On earnings, Dong forecast that the bank's 2008 profit growth would at least double due partly to the government-enforced sale of its roughly 4 percent stake in Haitong Securities, China's third-largest brokerage.
Dong said that some existing major shareholders of Haitong Securities had already been in talks with Minsheng Bank for the share sale, although no deal was reached yet.
Beijing-based Minsheng Bank also plans to sell a 30-40 percent stake of its wholly owned credit card unit to overseas investors to lure foreign capital and expertise, said Dong.
It has issued more than 4 million credit cards after it launched its credit card business about three years ago, he said.
(Editing by Lincoln Feast)