(Shanghai Daily)
Updated: 2007-09-26 19:24

China Minsheng Banking Corp said yesterday it will buy a quarter of a Shenzhen-listed trust company as the lender endeavors to diversify businesses to add new revenue sources.

Shanghai-listed Minsheng will buy 143 million shares of Shaanxi International Trust & Investment Corp for 2.34 billion yuan ($312 million), the bank said in a statement to the Shanghai Stock Exchange.

The payout represents a stock price of 16.38 yuan apiece for Shaanxi Trust. Shares of the trust firm, which have more than tripled this year, surged by the 10-percent daily cap to close yesterday at 22.99 yuan.

Shaanxi Trust is proposing to sell up to 180 million shares in a private placement to investors, including Minsheng, to boost its stocks outstanding to 538.4 million shares, the firm said in a filing to the Shenzhen bourse.

The proceeds of the stock sale will be used to shore up working capital and expand new businesses, including asset-backed securities and foreign-exchange trading, Shaanxi Trust said.

The trust venture will cooperate with Minsheng and tap the lender's vast network and client base to conduct its trust business and improve profitability, according to the filing.

Chinese authorities are encouraging the development of the country's nascent trust sector by allowing industry participants to lure strategic investors and tap public funding for expansion.

Minsheng said early this month in an exchange filing that it is planning to establish 150 to 180 new sub-branches in the three-year period ending 2009 to expand its network in the country.

The Beijing-based bank will set up five to seven new branches in central and east China and will build more branches in the west, northeast and Hainan Province when needed, it said.

Shares of Minsheng dipped 2.62 percent to 15.23 yuan yesterday. The lender's shares have jumped 49.3 percent this year, lagging a 103-percent rise on the benchmark index.