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China's ICBC Signs $3.78-Billion Deal With American Express, Goldman

The agreement will involve the purchase of newly issued shares in the Beijing-based bank.

January 28, 2006|From Associated Press

SHANGHAI — China's biggest lender, state-owned Industrial & Commercial Bank of China, on Friday signed a $3.78-billion investment deal with Goldman Sachs Group Inc., American Express Co. and Germany's Allianz.

The deal, aimed at building "strategic partnerships" in banking, insurance and credit card businesses, will involve the purchase of newly issued shares in the Beijing-based bank, known as ICBC, the companies said. The deal is subject to regulatory approval.

The bank earlier had announced that the three companies planned to buy a combined 10% stake.

Although the transaction will not be completed until April at the earliest, Allianz will begin immediately to sell investment funds and life insurance policies through ICBC's 20,000 outlets, a spokesman said.

New York-based American Express confirmed that it was contributing $200 million to the deal.

American Express has had a card marketing deal with ICBC since 2004.

Friday's deal caps a spate of multibillion-dollar investments by major international financial institutions angling for a share of China's potentially huge and lucrative market.

By October, foreign banks had pledged or put $16.5 billion into 16 Chinese banks, according to the China Banking Regulatory Commission. Most of those investments were made in the last two years.

ICBC, which like other Chinese banks has been plagued with lending scandals and mountains of bad debt, expects the cooperation with its foreign partners to help improve its governance and risk controls. In a rare move, Goldman Sachs will appoint one member to ICBC's board.

With more than 20,000 branches, ICBC is a giant in an industry dominated by huge banks. By the end of September, its deposits totaled 5.59 trillion yuan, or about $700 billion.

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