SHANGHAI (AFP) — American Express Co. and German insurer Allianz said Tuesday they had offloaded half of their stakes in Industrial and Commercial Bank of China (ICBC) as soon as a lock-up period expired.
The sales followed similar moves by a number of foreign institutions that have sold their holdings in Chinese banks to shore up capital amid the global financial crisis, provoking anger over the process within China.
Allianz teamed up with American Express and US Wall Street giant Goldman Sachs in 2006 to invest 3.78 billion dollars in ICBC, the world's biggest bank by assets, giving them a total stake of about nine percent.
In joint statements with ICBC, Allianz said it sold 3.22 billion Hong Kong-listed shares and American Express said it sold 638.06 million shares as the stocks became free on Tuesday.
Neither company specified financial details of the sale, only saying the shares had been sold to "a select group of investors through a private sale."
The stake sold by Allianz and American Express could be worth 1.6 billion dollars and 318 million dollars respectively, based on a sale price of 3.86 Hong Kong dollars (0.5 US dollar) each.
Allianz and American Express sold the shares at 3.86 Hong Kong dollars per share, compared with the closing price of 4.02 Hong Kong dollars Monday, Dow Jones Newswires reported, citing an unnamed source.
Allianz now has a 0.97 percent stake in the Chinese bank and American Express a 0.2 percent stake. Both are eligible to sell their remaining holdings on October 20, according to the statements.
Goldman Sachs said in late March it would sell part of its holding in the Chinese bank but agreed to keep at least 80 percent of its 4.93 percent stake until April 28, 2010.
In January, Switzerland's biggest bank, UBS, raised about 800 million dollars by selling its entire stake in Bank of China, and Royal Bank of Scotland sold its stake in BoC for 2.43 billion dollars.
Also that month, Bank of America sold 2.8 billion dollars worth of shares in China Construction Bank, reducing its stake from 19.1 percent to less than 17 percent.
The latest divestments look set to further anger critics in China of the process that gave foreign investors preferential treatment in buying stakes in state-owned banks as they were prepared for listings.
The recent sales have led to accusations that the process enabled foreign banks to make quick profits by selling the holdings after the institutions listed.
Amid this criticism, the country's top banking regulator was quoted as saying this month that authorities would extend the lock-up period for foreign investors in its commercial banks from three years to five.
However, in a note issued before Tuesday's announcement, Moody's said it saw "no meaningful impact" for the Chinese banks from the foreign sales.
"Just as we did not necessarily change our ratings on Chinese banks when they established their partnerships, we will not necessarily do so simply because their partners are selling down their stakes," Moody's said.
Allowing foreign institutions to buy in at below market prices showed a lack of financial expertise on the Chinese side, said Cao Huining, professor of finance at Beijing's Cheung Kong Graduate School of Business.
"There should have been a better bidding mechanism in place when (Chinese banks) sold their stakes to strategic investors," Cao said.
"In China, it seems government officials, not financial gurus, still have the final say," he said.
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