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Goldman Sachs sells out ICBC stake, reaps 7bln

2013-05-21 13:58 Caijing     Web Editor: yaolan comment

Goldman Sachs has sold its last stake in Industrial and Commercial Bank of China (ICBC), the world's largest bank by assets, amid dimmer prospects of Chinese banks' profitability and concerns over increasing risks from rising non-performing loans.

The investment bank raised USD 1.1 billion from selling its remaining ICBC stake Monday at HKD5.47-HKD 5.50 per share, ending its 7-year strategic investment in the Chinese bank which gave it a total return of USD7.26 billion (excluding foreign exchange factor and dividend).

A consortium led by Goldman Sachs signed an agreement to buy 10% ICBC shares with USD3.78billion in 2006, with the investment bank getting a 7% stake.

The selling price at HKD 5.47-HKD 5.64 represented a discount of at least 3%, when compared with the closing price of HKD 5.64 Monday.

Goldman Sachs had reduced its stake in ICBC five times before Monday's sales as international institutions expressed growing worries over China's banking industry and overall economy.

Some analysts believe the days of high profitability for Chinese banks are coming to an end.

Four of China's five largest state-owned banks People's Bank of China (PBoC), Bank of China (BoC), Agricultural Bank of China (ABC), China Construction Bank (CCB), Industrial and Commercial Bank of China (ICBC) and Communication Bank of China (CBC), reported slower Q1 profits growth.

The five largest banks churned out a total profit of CNY230billion in the first quarter, roughly 74.9% of profits generated by the 16 public banks which earned CNY206.9billion in the same period.

Meanwhile, non-performing loan (NPL) outstanding of Chinese commercial lenders surged 16.8% in the first quarter from a year earlier, while the NPL ratio continued climbing to 0.96%, according to China's top banking regulator.

 

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