Friday, March 28, 2008

Central Hujin to shift 3 bln BoCom stake to Finance Ministry

China's Central Hujin Investment Co., an investment arm of the government, will transfer three billion Hong Kong-listed shares in the Bank of Communications (BoCom) <601328><3328> to the Ministry of Finance, which has been approved by the State Council.

After the shift, the ministry will become the top shareholder by holding 26.483% stake in BoCom. Central Hujin previously held 6.12% stakes in BoCom. The move was driven by the concerns that it had too many investments in the volatile finance sector, said Wu Yonggang, an analyst with Guotai Junan Securities Co.

Meanwhile, it still needed the approval of the China Banking Regulatory Commission, according to simultaneous statements by the ministry and Central Huijin, stressing that the move aimed to integrate state-owned financial resources and optimize the allocation of theses resources.

HSBC Holdings Plc<5>, holding a 19% stake in BoCom, can continue its purchase of the shares under a consensus reached by both sides. And analysts said that the share shift would not affect the development of BoCom, including its plan to build credit card and pension fund companies.

BoCom's 2007 net profit surged 65% year-on-year to RMB 20.3 billion, according to its 2007 annual report.

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