China Bank buys stake in United Commercial Bank

UCBH Holdings Inc., the parent company of United Commercial Bank, agreed to let China Minsheng Banking Corp. acquire a 9.9 percent stake in UCBH and have an option to buy 20 percent of the bank. According to report in San Francisco Business Times, this is “the first Mainland Chinese bank to successfully make a strategic investment in a U.S. bankment in a U.S. bank.” UCBH, based in San Francisco, with $10.7 billion in assets, several reasons for pursuing the investment: “the move increases UCBH’s access to capital, enhances the bank’s platform to conduct cross-border business and better positions UCBH for growth in China while becoming more competitive in the United States”. Minsheng, founded in 1996, has a market cap of $30 billion. The bank operates almost 300 branches and 1,370 ATMs in the wealthy coastal areas of China. UCBH itself announced plans to buy a bank in China earlier this year- Shanghai’s Business Development Bank Ltd. The Times reports that proceeds from this transaction will be used to fund that acquisition.