Royal Bank of Scotland (RBS), the second-biggest Bristish bank, will buy as much as a 15% stake in Bank of China (BOC) for up to US$5 billion, a press report said on July 27.
The two banks are close to an agreement on a deal that could set a record for the largest ever single foreign direct investment in China, the South China Morning Post reported, citing unnamed market sources.
The newspaper said Zhu Min, a BOC assistant president with responsibility for restructuring and listing, visited RBS’s Edinburgh head-quarters last week.
China’s second-largest lender hopes to sell RBS a 10 to 15% stake by early next month after drawing criticism back home for moving too slowly in finding a foreign partner to bolster its reform and restructuring efforts ahead of a planned stock market listing.
“BOC is under a lot of pressure right now,” one unidentified banker was quoted as saying. “(It was) the first of the major Chinese banks to boast publicly of talks with potential foreign strategic investors.”
The newspaper said RBS had signed a non-binding memorandum of understanding to take a 15% stake in BOC.
BOC and RBC officials either declined comment or said they were unaware of the deal’s imminent conclusion.
According to the daily, BOC is also in talks to sell much smaller equity interests to two additional financial investors. The bank has said it will limit its foreign strategic investors’ combined stake to 20 % initially.