Ping An Bank, SDB Integration Plan Comes out

Both Shenzhen Development Bank (SDB, 000001.SZ) and Ping An Insurance (Group) Company of China Limited (Ping An, 601318.SH, 2318.HK) have passed the integration plan for Ping An Bank and SDB.

As the parent company of both lenders, Shenzhen-based Ping An intends to subscribe for a total of 1.639 billion shares of SDB at a cost of CNY 29.1 billion. The parent group will subscribe for these shares with a 90.75% stake in Ping An Bank and CNY 2.692 billion worth of cash. After the move, Ping An is to take a 52.38% stake in SDB and Ping An Bank will then become the subsidiary of SDB. On September 1, Shenzhen-traded SDB closed up 3.88% at CNY 18.19 per share and Shanghai-traded Ping An closed up 4.52% at CNY 48.61 per share.

As for the 9.25% stake that minority shareholders hold in Ping An Bank, SDB is guessed to buy these shares in cash at a possible price of CNY 3.37 per share. In the future, SDB is likely to be named as China Ping An Development Bank.

By June 30, 2010, SDB had 20 branches and 303 outlets across the nation. After the integration, the lender is expected to have five more branches and 70 more outlets. In the future, the retail banking and the service for small and medium enterprises customers will be the core businesses of the banking unit of Ping An. Actually, with more and more wealthy people emerging in China, the customers will have much stronger demands for the wealth management services and products in the future. Therefore, Ping An and its banking subsidiary vow to further boost this business as much as they can.

During the first half year, SDB achieved the net commission incomes of CNY 750 million from the intermediary business, accounting for 8.8% of its operating turnover in the period. Noticeably, the sales of the wealth management products increased by 427% year on year to CNY 33.7 billion from this January to June. At the same time, SDB saw its retail deposits outstanding stand at CNY 79.9 billion by the end of this June and the individual loan outstanding of CNY 102.3 billion. During the first six months of the year, the lenders accumulatively offered personal loans of CNY 27 billion, including CNY 3.7 billion worth of the personal auto loans. During the first six months of this year, Ping An Bank gained net profits of CNY 900 million.