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Xiaomi, Bank of Beijing announce deal, followed by insider trading

2014-02-20 14:15 Global Times Web Editor: qindexing

Chinese smartphone manufacturer Xiaomi Inc signed a deal with Beijing-based Bank of Beijing (BOB) to co-develop an Internet finance business, the bank said on Wednesday.

However, a filing by BOB on Tuesday evening to the Shanghai Stock Exchange attracted more attention than the deal itself, analysts say.

The two companies will cooperate extensively in areas including mobile payment, lending loans as well as product and service customization, according to a statement issued Wednesday.

The two will explore Near Field Communication technology and methods of allowing individuals to apply for loans via mobile phones, and selling financial and insurance services on Xiaomi's Internet finance platform, said the statement.

The bank said that one of its vice presidents, Zhao Rui'an, informed the bank that he bought 30,000 shares of the BOB for 7.38 yuan ($1.21) per share on Monday, two days before the bank's disclosure of its deal with Xiaomi. The total sum involved is around 220,000 yuan.

On Tuesday, BOB shares closed at 7.23 yuan per share, down 2.03 percent from Monday.

Zhao explained his behavior as an individual one, based on "his optimistic view toward the bank's future development."

But investors think it is likely Zhao's action might qualify as insider trading, according to media reports.

"Zhao's title and the timing of his buy really put him under the spotlight," Yang Zhaoquan, a lawyer at Beijing Vlaw Law Firm, told the Global Times.

"If he is put under investigation, he will have to demonstrate that he was not in a position to benefit from insider information," Yang noted Wednesday.

Boosted by the news of the cooperation, BOB's share price soared by 10 percent to end at 7.95 yuan per share Wednesday.

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