SYDNEY - Commonwealth Bank of Australia (CBA), the nation's biggest home lender, will buy 19.9 per cent of Hangzhou City Commercial Bank, its second acquisition in China in seven months, aiming to tap the country's rising savings.
Hangzhou Bank, based in the eastern province of Zhejiang, is one of the
five biggest city banks in China by assets, Sydney-based CBA said yesterday. It will pay A$100 million ($106.6 million) for the stake.
Demand for financial services in China is rising as economic growth boosts wages and household savings.
The economy of the world's most populous nation grew 9.5 per cent last year, an eight-year high and the fastest for a major economy.
China's 1.3 billion people had a record 12.9 trillion yuan ($2.14 trillion) of savings in banks at the end of February, 16 per cent higher than a year earlier, bank data show.
"It's an entry into a growing and increasingly lucrative market," said Atul Lele, who holds CBA stock for the equivalent of US$500 million ($688 million) he helps to manage at White Funds Management, Sydney.
Overseas lenders are expanding in Asia's second-biggest economy behind Japan as curbs are lifted on foreign participation in the market.
London-based HSBC Holdings agreed in August to pay 14.46 billion yuan for 20 per cent of Bank of Communications, China's No 5 lender. It was HSBC's third buy in China and the biggest by an overseas lender.
Commonwealth acquired 11 per cent of Jinan City Commercial Bank, China's eighth-biggest city commercial bank, in September.
Commonwealth Bank stock closed 20Ac higher at A$35.74 in Sydney. It is the best performer in the eight-member S&P/ASX 200 Banks Index this year, rising 11.3 per cent.
- BLOOMBERG
