OREANDA-NEWS.  February 03, 2014. Industrial and Commercial Bank of China Limited (“ICBC”) announced that ICBC has reached an agreement with Standard Bank Group Limited (“Standard Bank”) regarding the acquisition of 60 percent of the existing issued shares in Standard Bank Plc (“SB Plc”). The parties will proceed to seek regulatory approvals for this transaction.

SB Plc is a bank wholly owned by Standard Bank via Standard Bank London Holdings Limited (“SBLH”). With full banking licenses, SB Plc has an active global markets business with in depth knowledge of emerging markets, as well as extensive experience in trading commodities and providing global markets solutions to meet its clients’ needs. In addition to the global markets business, which includes commodities, foreign exchange, interest rates, credit and equity trading, SB Plc has also historically been engaged in other businesses such as corporate lending and investment banking. Under the share sale and purchase agreement, SB Plc will carve out all businesses not related to the global markets business prior to completion of the transaction. Following the completion of the carve-out and re-organization, SB Plc will become a bank dedicated to the global markets business, providing services to global clients through its affiliates and operations in the London, New York, Singapore, Hong Kong, Dubai, Tokyo and Shanghai.

According to the share sale and purchase agreement, the purchase price to be paid by ICBC to SBLH will be determined by reference to the net asset value of SB Plc at the completion date of the transaction. Based on the net asset value of SB Plc as at the end of June 2013, the consideration for this transaction is estimated to be approximately USD770 million. In addition to the 60 per cent. of shares to be acquired on the completion date, ICBC has a call option to increase its shareholding in SB Plc to 80 per cent in the future. SBLH will have a put option, exercisable after ICBC’s call option is exercised, to require ICBC to purchase all of the shares in SB Plc. Under the Listings Requirements of the exchange operated in South Africa by JSE Limited (“the JSE”), the transaction requires Standard Bank’s shareholders’ approval, which will be sought in a shareholders’ meeting expected to be held in March 2014.

Mr. Jianqing Jiang, the chairman of ICBC, stated, “The large amount of commodities trading and the consequential needs for hedging resulting from the development of the Chinese economy, as well as financial reforms such as the deregulation of interest rates and foreign exchange rates, along with the two-way opening-up of capital markets, have posed new demands for the transformation of the service capabilities and business model of Chinese banks. By leveraging SB Plc’s global markets business platform, mature business model, and industrial expertise, this transaction will elevate ICBC’s global markets capabilities in business development, risk management, operations, and innovation in order to better serve our clients’ needs. With the advantageous strength and resources of the shareholders, the joint venture will continue to enhance risk management and compliance practice. On this basis, the joint venture will steadily develop current businesses while exploring new business opportunities with high growth potential. Serving both ICBC and Standard Bank’s clients, as well as Chinese clients’ needs in global commodities, foreign exchange, interest rates, credit, equity and risk hedging service, I believe the joint venture will become a financial markets business platform that will satisfy both parent shareholders’ strategies.”

Ben Kruger, joint chief executive officer of Standard Bank said, “We are excited about the prospects of deepening and extending our cooperation with ICBC through the global markets platform that we have built outside Africa. The strength and reach of ICBC, our strategic partner, will open a wide range of new business opportunities for the global markets business, while continuing to serve Standard Bank’s African clients as their economies continue to grow and develop.”

Completion of the abovementioned transaction is subject to the approval of relevant regulatory authorities within and outside of China.