From Bloomberg News (link)
Citigroup Inc., the world’s biggest financial-services company, is offering to reduce its planned investment in Guangdong Development Bank to salvage a $3 billion takeover of the Chinese lender, said two people with direct knowledge of the situation.
Chinese rules prevent an overseas company from acquiring more than 19.9 percent of a bank. Citigroup was proposing to buy 40 percent of Guangdong Development as part of an investment group seeking an 85 percent stake. While the group still plans to buy 85 percent, Citigroup may cut its holding to less than 20 percent, said the people, who declined to be identified before an agreement is reached.
“There’s real concern about losing control of the banking system and fears that the local banks have no way to compete with the more sophisticated foreign banks,” said Stephan Rothlin, secretary general of the Center for International Business Ethics in Beijing.
