With the approval of the State Council, the National Social Security Fund (NSSF), the strategic investor, is going to make investments in the National Development Bank (NDB) and the Agricultural Bank of China (ABC) to participate in their joint-stock transformation. The news was revealed at the All-Directors' Meeting of the National Social Security Fund held on February 25.
Caijing Magazine has learned that the Social Security Fund has launched a due diligence investigation on NDB, while the NDB side claims it will only consider a strategic partner from within the country. The Agricultural Bank is lagging in the process, and it has not yet been made clear whether overseas investors will be included in its considerations.
"The investment will be finalized this year, but the actual amount of investment hasn't been fixed," an informed source told Caijing Magazine.
Last September, Dai Xianglong, the chairperson of the NSSF Council and ex-PBC governor, expressed the view that the fund would invest in a series of financial agencies, but the amount and proportion of shares were yet to be finalized. This indicates that NDB's search for strategic partners started some time ago, but to date it has looked for satisfactory partners no further than NSSF, and the selection is limited to domestic investors.
China National Development Bank officially went public on December 16 last year, with a registered capital of 300 billion yuan (US$43.99 billion), co-funded by the Ministry of Finance and Central Huijin Investment Limited, who respectively hold 51.3 percent and 48.7 percent of NDB's equity, transforming NDB from a policy bank to a commercial bank.
NSSF's investment is forecast to reach as much as 50 billion yuan (US$7.33 billion), and the Fund will accordingly hold 10-15 percent of NDB's entire capital.
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(China.org.cn by Maverick Chen, February 26, 2009)