CEO Morning Brief

DBS Increases Stake in Shenzhen Rural Commercial Bank to 19.4% for RMB1.6 Bil

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Publish date: Mon, 27 Jan 2025, 11:06 AM
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The move is expected to be immediately accretive to DBS’s earnings and return on equity (ROE). Photo: Bloomberg

DBS Group Holdings, on Jan 27, announced that it has increased its stake in Shenzhen Rural Commercial Bank to 19.4% from 16.69%. The bank bought the additional stakes after entering into agreements with Shenzhen Shekou Dawah Real Estates Development Co., Ltd and Shenzhen Shekou China Merchants Harbour Engineering Co., Ltd. on Nov 8, 2024.

Under the transaction, DBS acquired 281.6 million shares in the Chinese bank for a total consideration of RMB1.596 billion ($295 million) or RMB5.67 per share.

According to DBS, the investment is in line with its strategy to invest in its core markets as well as expand its exposure to the Greater Bay Area.

DBS first acquired a 13% stake in Shenzhen Rural Commercial Bank in October 2021 and subsequently increased its stake to 16.69% in January 2024. The consideration represents 1.05 times of Shenzhen Rural Commercial Bank’s book value per share as at its 3QFY2024 results.

The consideration was paid with DBS’s internal cash resources and has a less than 0.1 percentage point impact to DBS’s consolidated capital ratios. The move is also expected to be immediately accretive to DBS’s earnings and return on equity (ROE).

Shares in DBS closed 9 cents higher or 0.21% up at $43.60 on Jan 27.

Source: TheEdge - 27 Jan 2025

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