Deutsche will subscribe to approximately 265.6 million newly issued shares in Hua Xia Bank for a total price of Rmb3.9 billion ($550 million).
The issue to Deutsche is part of a private placement of Hua Xia Bank shares to its three largest shareholders. A total of Rmb11.6 billion shares will be bought by Deutsche, Shougang (a Chinese steel producer) and China State Grid Corporation.
The deal is subject to regulatory approvals. Deutsche now has two nominee directors on the Hua Xia board.
ôDeutsche BankÆs partnership with Hua Xia Bank is an important part of our strategy to secure direct participation in the development of ChinaÆs financial services market,ö says Colin Grassie, CEO of Deutsche Bank Asia-Pacific in a written statement.
Deutsche Bank Group announced in October 2005 that it would acquire a 9.9% stake in Hua Xia from existing Hua Xia shareholders and European private bank Oppenheim would buy another 4.1%, taking the combined holding of the two European firms to 14%.
In the deal, which was approved in May 2006, Deutsche Bank AG purchased 295 million shares representing 7.02% and Deutsche Bank Luxembourg 121 million shares representing 2.88%. At the time, Deutsche was granted one seat on the Hua Xia board.
In June 2007 Deutsche and Hua Xia launched a joint credit card business in China. Deutsche is also providing technical support and assistance to Hua Xia to strengthen its existing franchise in areas such as risk management, treasury, retail and corporate banking.
Hua Xia Bank, which is listed on the Shanghai Stock Exchange, is the twelfth largest bank in China by asset size with 9,390 employees and a national banking license. As of December 31, 2007, it had 287 retail branches in 31 cities throughout China.
Hua Xia started business in Beijing in 1992 and became a nationwide joint stock commercial bank after restructuring in 1995. It went public in September 2003. At the end of calendar 2006, Hua Xia Bank had total assets of Rmb445 billion on which it earned a net profit of Rmb1.5 billion.