Citigroup has won an 18-month bidding war among overseas suitors for a stake in Guangdong Development Bank (GDB), an official with the US banking giant said yesterday.
The Chinese bank has plumped for Citigroup as the preferred bidder to buy a stake and operate the mid-sized lender, said Robert Morse, chief executive of Citigroup Corporate Investment Banking for Asia.

People walk past a Citibank branch in Shanghai yesterday.[Reuters]

A consortium led by Citigroup will pay US$3.06 billion for an 85.6 per cent stake in GDB, according to a statement issued at a signing ceremony in Guangzhou, the capital of South China's Guangdong Province.

Citigroup will have a 20 per cent share of the bank, which is owned by the provincial government, the statement said. This complies with a 25 per cent cap on foreign ownership in the banking sector after taking into account computer-services behemoth and bid partner IBM's 4.74 per cent stake.

Citigroup had been competing with a consortium led by Societe Generale SA of France for control of the 500-branch bank. Citigroup has 13 outlets in China.

The Guangdong bank now has to apply to the China Banking Regulatory Commission for permission to have a new shareholder.

Citigroup will appoint a CEO for the Guangdong bank by the time the transaction is completed, expected by the end of this year, Richard Stanley, the US bank's head of China, said after the signing ceremony in Guangzhou.

As part of the bidding group, China Life and State Grid Corp of China will each own 20 per cent, the statement said. China CITIC Trust & Investment Co will hold 12.85 per cent and China Puhua Investment will take 8 per cent.

The Guangdong bank was established in 1988.

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