DBS Bank is set to acquire a 13% stake in Shenzhen Rural Commercial Bank and a seat on its board of directors.
DBS Bank, a wholly-owned subsidiary of DBS Group Holdings, has agreed to acquire a 13% stake in Shenzhen Rural Commercial Bank (SZRCB) .
In a bourse disclosure, DBS said that its investment in the private Chinese banks was worth $1.079m. The 13% would make DBS the bank's larget shareholder, with a representation on its board of directors.
The move has been approved by both the Monetary Authority of Singapore and the Shenzhen Office of the China Banking and Insurance Regulatory Commission.
"We see this as a highly complementary strategic partnership that will allow us to double down on the Greater Bay Area (GBA) and leverage on SZRCB’s local network and know-how to deepen DBS’ Greater Bay Area strategy. At the same time, we would be able to support the continued growth and digital transformation of SZRCB through our regional presence and digital capabilities," said DBS CEO Piyush Gupta.
Increasing its exposure to China, the move would allow DBS to create "mutually beneficial" collaborations between the SZRCB and the Hong Kong and China franchises of DBS.
SZRCB operates one of the largest bank branch networks in Shenzhen, with 210 branches and over 2,100 self-service terminals. Its loans primarily support Shenzhen-based small and medium enterprises.
As of December 2020, SZRCB has $106b total assets, $82b deposits, and a net profit of $4.8b after tax.