DBS Group Holdings, through its wholly-owned subsidiary, DBS Bank Ltd, has obtained the requisite regulatory approvals to increase its existing stake in Shenzhen Rural Commercial Bank Corporation Limited.
Following the approval, DBS’s stake is now at 16.69%, up from the 13% it first acquired in October 2021. Since the acquisition of its 13% stake, DBS has been in discussions with Shenzhen Huaqiang Asset Management Group Co. Ltd. since 1Q2023 to acquire the latter’s stake in Shenzhen Rural Commercial Bank. DBS then entered into an agreement, which was subject to regulatory approval, with Shenzhen Huaqiang on Sept 15.
Under the transaction, DBS will acquire 383.6 million shares in Shenzhen Rural Commercial Bank from Shenzhen Huaqiang for a total of RMB2.01 billion ($376 million) or RMB5.25 per share. The consideration is equivalent to 1.05 times of the book value per share for the latest available quarter. The transaction will be funded using internal cash resources. It will have a less than 0.1 percentage point impact to DBS’s consolidated capital ratios.
According to DBS, the transaction does not require the bank to commit any technology resources. DBS has been banned by the Monetary Authority of Singapore (MAS) for six months from Nov 1 from making non-essential IT changes to ensure that keeps a “sharp focus” on restoring the resilience of its digital banking services.
The transaction is expected to be immediately accretive to DBS’s earnings and return on equity (ROE).
Shares in DBS closed 37 cents higher or 1.12% up at $33.41 on Dec 29.
