30 December 2016
Kuala Lumpur: CIMB Group Holdings Berhad (“CIMB" or "the Group”) today announced that it had entered into a Share Transfer Agreement to sell its 18.21% stake in the Bank of Yingkou Co., Ltd. (“BYK”) to Shanghai Guozhijie Investment Development Co., Ltd. for a total consideration of RMB1.507 billion (approximately RM972 million*). This values the stake at approximately 1x the price to book value ratio of BYK.
At the same time, CIMB Group also inked a Long Term Collaboration Agreement with BYK for both entities to continue collaborating in areas of staff exchanges, product development, training and sharing of market intelligence.
Commenting on this disposal, Group Chief Executive, CIMB Group, Tengku Dato’ Sri Zafrul Aziz said, “This has certainly been one of CIMB Group’s best investments. Since our entry in 2009, this investment has yielded an IRR of 17.4% and a money multiple of 3.3 times. However, capital requirements for minority investments in other banks such as this has continued to increase, so much so that in time, the returns threshold required to justify this investment will be too high.”
“This disposal is also in line with CIMB's T18 operating and capital targets, and our plans to focus on our core business in our core markets. However, I look forward to continuing the strategic collaboration with the Bank of Yingkou in deepening our understanding of the consumer and commercial banking markets in China, for us to continue to build ‘China expertise’ within our ranks,” Zafrul concluded.
From the time of its entry up till the end of September 2016, the Group had shared approximately RM651 million of BYK’s profits. For the first nine months of 2016, CIMB’s share of these profits was approximately RM93 million.
This all-cash transaction is subject to regulatory approvals including that of the Chinese Banking Regulatory Commission and is expected to complete in 2017.
*Based on an exchange rate of Renminbi (“RMB”) 1.00 : Ringgit Malaysia (“RM”) 0.6448 being the middle rate prevailing as at 5.00 p.m. on 29 December 2016 as published by Bank Negara Malaysia.