Last week, China CITIC Bank acquired a 70.32 per cent stake in CITIC International Financial Holdings Ltd. from the British Virgin Islands-registered Gloryshare Investments (GI), a wholly-owned subsidiary of CITIC Group. By terms of the contract, the stake will be purchased from the BVI company for HKD 13.56 billion in cash. Some analysts consider that the deal brought the bank a HKD 2.11 billion non-guarantee loan.
In January 2009, CITIC International Financial, which is a joint venture between the BVI-registered GI and Banco Bilbao Vizcaya Argentaria SA (BBVA) , signed a contract to receive a HKD 3 billion credit line from its two shareholders - a HKD 2.11 billion credit line from GI, and a HKD 890 million one from BBVA. After the completion of the deal, CITIC Bank will take the responsibility to grant the HKD 2.11 billion credit line to CITIC International Financial. The credit line is of no guarantee as it was granted by parent company to subsidiary.
CITIC Bank's loans granted to related companies reached CNY 2.8 billion in 2007, rising 23.05 per cent year on year, and making 0.49 per cent of its total loans. In 2008, the amount of loans reached 5.7 billion - 104.9 per cent from a year ago, accounting for 0.88 per cent of the total loans. This year, the figure is expected to be around HKD 7.8 billion.
GI, a wholly-owned subsidiary of CITIC Group, became the fourth biggest shareholder of CITIC Bank having taken a 4.93 per cent stake in it as of March 31, 2009.
