KUALA LUMPUR: CIMB Group Holdings, Malaysia’s second largest lender by asset value, said on Friday it had sold its 18.21% stake in China’s Bank of Yingkou for approximately 972 million ringgit ($217 million) to a Chinese investment holding company, Shanghai Guozhijie Investment Development. “Capital requirements for minority investments in other banks such as [Bank of Yingkou] has continued to increase, so much so that in time, the returns threshold required to justify this investment will be too high,” Zafrul Aziz, group chief executive of CIMB Group, said in a statement. He added that despite the investment being one of the best the group had made, the disposal was in line with CIMB’s operating and capital targets for 2018, “and our plans to focus on our core business in our core markets.”
CIMB invested in Bank of Yingkou in 2009. The stake sale brought in an internal rate of return yield of 17.4% and a money multiple of 3.3 times. The bank further revealed that up until the end of September 2016, CIMB had shared about 651 million ringgit of Bank of Yingkou’s profits. In the first nine months of 2016, CIMB’s share of these profits was about 93 million ringgit.
CIMB said the cash transaction was awaiting regulatory approvals, including from the Chinese Banking Regulatory Commission. It is expected to be completed by 2017. The Malaysian financial group also inked a long-term collaboration agreement with Bank of Yingkou to continue partnership in areas such as staff exchange, product development, training and sharing of market intelligence. Bank of Yingkou is made up of over 100 branches of city credit cooperatives in Yingkou City in China’s northeastern province of Liaoning, and includes retail, corporate and international banking. CIMB’s shares closed 0.44% lower at 4.56 ringgit. The benchmark FTSE Bursa Malaysia KLCI ended its last trading day of the year up by 0.18% at 1,620.07 on Friday.
