A group led by Goldman Sachs is set to sign an agreement in January to invest about $3.7bn for 10 per cent of the Industrial and Commercial Bank of China (ICBC), after it won approval from China's State Council or cabinet.
A deal would lay the groundwork for the overseas listing of China's largest lender, which with about 20,000 branches accounts for one-fifth of the country's banking system, and the possible re-opening of negotiations with state-controlled investment agencies from Kuwait and Abu Dhabi.
International banks have been vying for stakes in Chinese lenders in the hope of tapping into the country's rapid growth. Beijing is counting on foreign investors to help clean up its banking system, though it has recently become concerned that it has been selling these stakes too cheaply.
Among the deals struck so far, the Bank of America paid $3.0bn for 9.0 per cent of China Construction Bank in June; the Bank of China has sold stakes to the Royal Bank of Scotland, UBS and the Asian Development Bank. Temasek of Singapore has also agreed to buy a stake in BoC.
The size of Goldman's investment is more than the $3.0bn suggested in late August when the consortium, which also includes Germany's Allianz and American Express, signed a memorandum of understanding with ICBC. A person familiar with the negotiations said the $3.7bn price tag reflected both a higher valuation and the fact that the stake would be slightly larger than expected in August.
"The size of the stake that is on the table has increased," the person said, adding that the group had not come under pressure to pay more for its stake.
Regulatory approval for the investment might prompt ICBC to restart negotiations with the two Arab stakes. It had halted talks in November amid concerns about foreign involvement in the banking sector.
It is understood the bank would like to complete the deal with the Goldman-led group and appoint bankers for the listing before continuing with these talks.
Goldman Sachs and ICBC declined to comment.
FT Syndication Service