RPT-UPDATE 1-Minsheng eyes Europe partner, share placement


* To seek new foreign partner, in talks with European firms

* To issue 1-1.5 bln new shares to big Chinese shareholders

* To increase UCBH stake to 19 pct from 9.9 pct (Adds quotes, details and background)

By George Chen and Xie Heng

BEIJING, March 9 (Reuters) - China Minsheng Banking Corp 600016.SS, the country's first private sector bank, said on Monday it is in talks with European financial firms aimed at selling a minority stake in the Chinese lender.

Minsheng also plans to raise roughly 10 billion yuan ($1.46 billion) by issuing 1-1.5 billion new shares in a private placement to existing large domestic shareholders this year, Chairman Dong Wenbiao told Reuters in an interview.

The Shanghai-listed company also plans to lift its stake in California's UCBH Holdings Inc UCBH.O, the parent of United Commercial Bank, to 19 percent from 9.9 percent, Dong said.

“China’s economic situation won’t worsen too much and Minsheng Bank can overcome all the difficulties of the financial crisis,’ he said at the bank’s headquarters.

If successful, the private placement would lift Minsheng’s capital adequacy ratio, a key measure of financial strength, to over 10 percent from about 9 percent and support its expansion at home and abroad despite the global financial crisis, Dong said.

“Public investors now are very cautious, so we prefer a private placement as our existing large shareholders understand our business very well and their interest to increase their holdings in our bank is also very strong,” he said.

He said the bank’s non-performing loan ratio will remain below 2 percent this year despite stepped up lending to support Beijing’s stimulus measures.

Minsheng Bank, China’s No.7 lender by assets, has applied to Hong Kong regulators to set up a branch in the former British colony and it expects to begin offering banking services there later this year, Dong said. Minsheng would then consider acquisitions to build its Hong Kong network, he said.


Dong declined to name any of the European firms involved in talks with in Minsheng.

“U.S. banks are having lots of problems. By comparison, European financial institutions are in a relatively better situation, so we are interested to talk to some of them,” Dong said.

Singapore sovereign wealth fund Temasek Holdings [TEM.UL], a long-term investor, sold its remaining Minsheng stake of less than 2 percent in the last quarter of 2008, Dong said.

“We don’t have any foreign strategic partner now, so we want to have a new foreign partner to help us to improve our business model and management,” he said.

“But money is not the only thing that we want and the price won’t be cheap just because of the financial crisis,” he said, adding the bank would also issue new shares to a foreign investor via a private placement if a deal can be reached.

In December, Minsheng said it won approvals to pay $29.9 million to raise its stake in UCBH, which serves Chinese communities in the United States, to 9.9 percent from 4.9 percent. [ID:nSHA304125]

Dong said Minsheng Bank is still keen to expand in the United States but has no interest in buying assets in other foreign banks such as Royal Bank of Scotland Group Plc RBS.L (RBS), which is trying to sell some assets including its China business. ($1=6.838 Yuan) (Reporting by George Chen and Xie Heng; Editing by Guy Dresser)