ING Group NV, the biggest Dutch financial services company, has agreed to buy a stake in Bank of Beijing Co. for $215 million.
ING is to get a 20% stake in Bank of Beijing and two seats on its 15-member board of directors, the Amsterdam company said Friday. ING and Bank of Beijing, which has 3,600 employees, plan to sell insurance and investment services through the Chinese bank’s 116 branches.
Economic growth in China is boosting demand for insurance and savings products there.
“This investment gives us access to a strong customer base, and the opportunity to penetrate more deeply into the Beijing market for insurance and wealth management products,” ING chief executive Michel Tilmant said at a briefing. “There is large growth potential for retail banking in China.”
Foreign banks are looking for partners in China as the nation prepares to open up its financial services industry next year in agreeing to enter the World Trade Organization. Foreign ownership in domestic lenders is restricted to 25%.
HSBC Holdings PLC, Europe’s biggest bank by market value, bought 19.9% of Bank of Communications, China’s fifth-biggest lender, in August 2004. Commonwealth Bank of Australia, the country’s second-biggest lender, is buying a stake in Jinan City Commercial Bank and is in negotiations to invest in Hangzhou City Commercial Bank in Zhejiang.
China’s banking regulator last year allowed the nation’s city commercial banks to expand outside their home bases for the first time, making them more attractive to overseas banks.
Bank of Beijing, which also has corporate banking clients, has a network of 272 cash machines as well as a fast-growing electronic banking business, ING said. ING, which makes a third of its profit from banking and the rest from insurance, has said it plans to use funds from more than $1.5 billion of asset sales last year to invest in online banking and insurance.
Bank of Beijing is the third-largest bank in the nation’s capital. International Finance Corp., the World Bank’s private equity arm, will buy a 5% stake in it, Bank of Beijing said.
