OCBC to subscribe for new Bank of Ningbo shares worth S$383m

Subscription should be completed by 3Q 2014.

In a release, Oversea-Chinese Banking Corporation Limited (OCBC Bank) announced that it has entered into an agreement to subscribe for up to 207,545,680 new ordinary shares in Bank of Ningbo Company Limited (Bank of Ningbo), at a subscription price of RMB8.85 for each new share.

OCBC Bank’s proposed subscription is in support of Bank of Ningbo’s planned private placement of new shares to its substantial shareholders. The total consideration for the share subscription is approximately RMB1.8 billion, or S$383 million and will be funded through internal resources.

The proposed share subscription is subject to regulatory approvals in China as well as Bank of Ningbo shareholders’ approval and is expected to be completed sometime in the third quarter of 2014. Following completion of the proposed share subscription, OCBC Bank’s aggregate equity stake in Bank of Ningbo is expected to increase from the current 15.34% to 20.00% of the enlarged issued capital.

“China’s growing connectivity with the region and the rest of the world, in terms of trade, wealth and capital flows, and the increasing internationalisation of its currency translate into excellent prospects for OCBC to grow and develop our business there. Therefore, banking with Chinese companies, onshore and offshore, and developing the ability to tap into the fast growing offshore yuan market will remain a key focus for us," said Mr Darren Tan, Chief Financial Officer, OCBC Bank.

"OCBC’s partnership with Bank of Ningbo, a strategically important one since 2006, has enabled us to reap significant benefits from working closely with a local partner. In particular, the partnership has been instrumental in enabling us to gain deeper insights into the Chinese market, and has resulted in collaboration in many areas such as product, business and talent development.

"We remain confident in the long-term growth prospects of Bank of Ningbo and the Chinese market, and believe that our partnership will continue to be mutually beneficial. In addition, our increased shareholding in Bank of Ningbo is consistent with our long-term strategy of deepening our presence in our four core overseas markets, of which, the Greater China region features prominently.”

Bank of Ningbo is listed on Shenzhen Stock Exchange and has a market capitalisation of approximately S$5.5 billion as at 10 January 2014. As at 30 September 2013, it has total net tangible assets of approximately RMB25 billion (S$5.2 billion) and a nationwide network of 200 branches and sub-branches, covering the cities of Ningbo, Suzhou, Shanghai, Hangzhou, Nanjing, Shenzhen, Wenzhou, Beijing, Wuxi and Jinhua.