Jul. 9, 2007 (China Knowledge) – Qingdao City Commercial Bank is set to sell a joint 24.9% stake to Intesa Sanpaolo Spa and International Finance Corp, investment arm of the World Bank. The former will be buying a 19.9% stake while latter will be buying 5%, topping up the total foreign stake to 24.9%.

Intesa, the second-largest bank in Italy, will fork out €100 million (US$136 million) for the deal, according to people with direct contact with the transaction.

Foreign investors eyeing stakes in Chinese banks must at least have US$10 billion in assets, two straight years of profits and a capital adequacy ratio of more than 8%, according to the China Securities Regulatory Commission's regulations. Foreign investors may own a maximum cumulative stake of 25% of a local bank, while individual ownership is capped at no more than 20%.  

The companies will sign an agreement on Thursday, July 12, Zhang Guanghong, chairman of Qingdao Bank said in a telephone interview. As China's 113 city commercial banks do not have sufficient funds and capital, they are limited to operating within their own regions. Most of them are unable to compete at the state-bank level and attain the capital adequacy ratio of 8% as required by government regulations. The selling of stakes in banks could bolster their finances.

Qingdao bank was founded in late 1996 in the Shandong Province.