UNITED KINGDOM: Barclays wins regulatory approval to buy into a Chinese trust company

Barclays has won regulatory approval to buy into a Chinese trust company, securing a foothold in the country's fast-growing asset management sector, two sources familiar with the situation said on Monday (July 23). London-based Barclays Bank Plc will be allowed to buy a nearly 20 percent stake in New China Trust & Investment Co., one of the country's oldest trust firms, after negotiations for more than one year between the two companies, the sources said. The purchase will make Barclays the first foreign bank with a stake in a Chinese trust firm, while others, including Morgan Stanley and UBS, are still in talks with potential Chinese partners. New China Trust, established in 1979, manages assets worth more than 7 billion yuan ($926 million) and has registered capital of 500 million yuan. New China Trust can help Chinese companies to underwrite corporate bonds and can help institutional investors, especially state-owned enterprises, to invest in domestic stocks. After the purchase, Barclays will be the second-largest shareholder in New China Trust and will appoint representatives to the board of the company, which is controlled by a Chinese investment firm with more than a 50 percent stake, the sources said. Barclays will have the option to increase its stake in New China Trust to just under 50 percent if and when Beijing lifts its investment cap for foreign firms, the sources said. Neither Barclays nor New China Trust could immediately be reached for comment. In a separate deal announced on Monday, China Development Bank, one of the country's three policy lenders, will buy a stake in Barclays, helping the British lender to raise its offer for ABN AMRO. ABN AMRO has won Beijing's approval to set up a wholly owned unit in China but Barclays has yet to apply for permission to incorporate locally, which would allow it to expand faster. The sources said Barclays could enter Chinese commercial banking through ABN AMRO's China platform if the offer for the Dutch bank is successful. Barclays plays an active role in wholesale banking services in China, while ABN AMRO has begun offering wealth management and private banking services through its retail network in China. ($1=7.562 Yuan)

ITN Source | July 24, 2007

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