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Pudong Bank not in talks on sale of more shares

2008-05-12 06:33

From:Shanghai Daily Article type:Reproduced

BEIJING, May 11 -- Shanghai Pudong Development Bank Co hasn't started talks about selling more shares to Citigroup Inc as the United States bank focuses on cutting costs and shoring up its finances, President Fu Jianhua said.

Citigroup "faced some difficulties," Fu said at a conference in Shanghai on Friday.

New York-based Citigroup owns a 3.78-percent stake in the Chinese company. The holding shrank from 5 percent after Pudong Bank sold new shares in November 2006.

"I don't think Citigroup has the ability to increase its stake in this bank in the near term as it is facing problems from the credit crunch," Ken Su, an analyst at KGI Securities in Hong Kong, told Bloomberg News by phone Friday.

Pudong Bank fell 5.1 percent to close at 28.08 yuan (US$4), the lowest since April 23. The stock has declined 31 percent this year, triggered by the bursting of China's equity market bubble and the prospect of an additional share offering that may raise as much as 20 billion yuan.

The bank said on Wednesday that 412.5 million of yuan-denominated shares will become tradable next week as their two-year lockup period expires.

"This is quite a demanding situation for Pudong Bank," Su said, adding that its shares may fall further this quarter. He has an "outperform" rating on the stock and a target price of 49.20 yuan.

Citigroup CEO Vikram Pandit may trim operations in Asia as part of the US bank's plans to cut costs, CreditSights Inc analyst David Hendler said.

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