March 24 (Bloomberg) -- Bank of China Ltd., the world’s third-largest lender by market value, received initial government approval for its delayed 236 million-euro ($322 million) investment in La Compagnie Financiere Edmond De Rothschild, two people with knowledge of the matter said.
The purchase of a 20 percent stake in the Paris-based asset manager was endorsed by China’s State Council ahead of an April 1 deadline, the people said, declining to be identified because the matter is private. Wang Zhaowen, a Beijing-based spokesman at Bank of China, declined to comment.
Bank of China was forced to extend an original Dec. 31 deadline for the deal, announced in September, after failing to get state approval. The move may be a sign the Chinese government is easing curbs on overseas acquisitions by financial firms that were imposed after almost $10 billion of losses on investments, including in Morgan Stanley and Barclays Plc.
Bank of China, which is expected to report today that 2008 profit climbed 21 percent to 67.8 billion yuan ($9.9 billion) according to a Bloomberg survey of analysts, rose 0.9 percent in Hong Kong at 2:30 p.m. Financial stocks rallied worldwide after the U.S. yesterday unveiled a plan to remove $500 billion of toxic assets from its banks.
Compagnie Financiere Edmond de Rothschild, the French fund- management unit of closely held LCF Rothschild Group, and Bank of China will begin an asset-management and private-banking venture to sell Rothschild’s financial products through the Chinese lender’s 10,800 branches, according to a Sept. 18 statement announcing the investment. The French firm managed 29.6 billion euros in assets at the end of 2007.
$570 Billion Cash
Chinese banks are more confident about making acquisitions over the next 12 months than rivals in other parts of the Asia- Pacific region because of their “comparatively stronger balance sheets,” PricewaterhouseCoopers LLP said yesterday, citing a survey done this year.
Chinese banks posted a 31 percent increase in combined profit for 2008 and will continue to outperform overseas rivals, Liu Mingkang, chairman of the China Banking Regulatory Commission, said last month. The nation’s three largest banks held a total of $570 billion in cash and cash equivalents as of Sept. 30, more than the combined market value of the world’s seven biggest non- Chinese lenders.
The last overseas bank acquisition to receive approval was China Merchants Bank Co.’s purchase of Hong Kong’s Wing Lung Bank Ltd. in September. That acquisition was completed only after China Merchants twice extended a deadline.
Chinese regulators last week blocked Coca-Cola Co.’s $2.3 billion takeover of the country’s biggest domestic juicemaker, citing competition concerns.
To contact the reporter of this story: Luo Jun in Shanghai at jluo6@bloomberg.net
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