Scotiabank has completed the acquisition of a further 13.2% stake in China-based commercial bank Xi’an City Commercial Bank (XACB), increasing its holding to 14.8%. Scotiabank has also entered into definitive agreements that will see the bank’s ownership stake in XACB increase to 18.1%, upon receipt of final regulatory approvals.
When completed, the total investment in XACB will reach C$162m. Further, Scotiabank intends to acquire additional shares from private sources to reach a total combined stake of approximately 20%, the regulatory limit for foreign bank investments in China.
As a result, XACB’s major shareholders now include Scotiabank, China Cinda Asset Management Co and Xi’an Municipal Government related entities. The increased ownership in XACB will increase Scotiabank representatives on XACB’s board of directors from one to two and also increase Scotiabank’s representation within the senior management team from one to three.
Rob Pitfield, group head of international banking at Scotiabank, said: “The China market has strong fundamentals with very good long-term growth prospects. Scotiabank’s increased investment in Xi’an City Commercial Bank is a great opportunity for us to capitalize on the strength of the China market and on the strong relationship that we have already built with XACB.”
Michele Kwok, senior vice president of Asia/Pacific and Middle East, said: “Xi’an City Commercial Bank is a solid financial institution, with a strong presence as a leading bank in the city of Xi’an, a major city in Western China with over 8 million people. We are confident that this additional investment will enable Scotiabank to continue to add strategic value that will generate strong financial returns. We look forward to working closely with all new and existing shareholders and with the management of the bank.”
