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Rothschild buys stake in chinese bank { August 15 2007 }

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   http://www.ft.com/cms/s/8a7f82ee-4aed-11dc-861a-0000779fd2ac.html

http://www.ft.com/cms/s/8a7f82ee-4aed-11dc-861a-0000779fd2ac.html

Rothschild buys stake in Chinese bank
By Peter Thal Larsen,Banking Editor

Published: August 15 2007 03:00 | Last updated: August 15 2007 03:00

Rothschild, the family-owned investment bank, has become the latest western institution to invest in the Chinese banking sector by taking a stake in a small regional bank.

Rothschild Continuation Holdings, one of the investment bank's holding companies, has bought a 5 per cent stake in Qingdao City Commercial Bank for €25.4m (£17.3m). The bank, based in the port city on the east coast of China, has links with Haier, a maker of electronic appliances.

The investment comes a month after Intesa Sanpaolo, the Italian banking group, bought a 20 per cent stake in the Chinese bank for $135m (£67m) as part of a broader fundraising that more than doubled the bank's capital. The move is expected to speed up QCCB's plans to pursue an initial public offering.

The Rothschild purchase is evidence of a willingness to use its own capital to make certain investments. Although the bank is best known for providing independent investment banking advice, Baron David de Rothschild, chairman, has expressed a desire to expand its principal business to broaden its revenue base.

It is also a signal of the bank's desire to break into new markets. Rothschild is well established in Europe and is expanding in the US, but has been weaker in Asia.

China has proved fertile for foreign companies taking minority stakes in some of the country's largest banks. Institutions that invested in banks such as Bank of China and Industrial and Commercial Bank of China have seen their stakes' value rise rapidly after successful IPOs. Yet, many of those gains are unrealised as investors agreed not to sell for a period after the offerings.

Investment banks are also eager to establish a foothold in China, attracted by the prospect of offering advisory and underwriting services to Chinese corporations.

UBS and Goldman Sachs recently won domesticsecurities licences, allowing them to underwrite offerings for domestic investors.

With 39 branches, QCCB has the second-largest branch network in Qingdao.

Copyright The Financial Times Limited 2007


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