Anbang raises stake in China Merchants Bank

Anbang Property & Casualty Insurance Company raised its stake in China Merchants Bank Co to just over 5 percent Monday, indicating that the insurer is optimistic about the lender's development potential, analysts said Wednesday.

China Merchants Bank, the country's sixth-largest bank in terms of assets, said in a statement filed late Tuesday with the Shanghai Stock Exchange that Anbang Property & Casualty now owns 1.26 billion of the lender's shares.

Anbang Property & Casualty, which is based in Shenzhen, South China's Guangdong Province, paid 13.68 billion yuan ($2.25) for the additional block of 1.13 billion shares.

The Shanghai Stock Exchange said in a separate statement Monday that 13.68 billion yuan worth of China Merchants Bank A shares were sold in block trades Monday, without identifying the buyers and sellers.

Jin Lin, a senior banking analyst with Orient Securities in Shanghai, told the Global Times Wednesday that one of China Merchants Bank's main strengths is providing financial services to small and medium-sized businesses, which China's top leadership is encouraging. It has also just undergone a comprehensive overhaul of its management, meaning that its future operation is likely to be more efficient, Jin said.

In the deal, which took place after the close of trade Monday, Anbang Property & Casualty paid 12.07 yuan per share, 10.7 percent higher than the price of 10.9 yuan at close of trade Monday.

"This indicates that Anbang Property & Casualty must be planning a long-term investment in China Merchants Bank," Jin said. "The 10 percent premium is not that high if Anbang Property & Casualty plans to hold the shares for more than 10 years."

Shares in China Merchants Bank fell to 11.02 yuan by close of trading Wednesday, down by 0.63 percent from Tuesday. The value of Anbang Property & Casualty's Monday purchase fell to 12.45 billion yuan by close of trade Wednesday.

Anbang Insurance Group, parent company of Anbang Property & Casualty, is now the bank's second largest shareholder with a holding of 7.77 percent of its shares, while China Merchants Group still holds more than 18 percent of the bank's shares, the 21st Century Business Herald reported Wednesday.

Anbang Insurance will not challenge China Merchants Group for control of the bank in the short term, Jin said.