Thursday, November 10, 2011

ICBC sees biggest fall in 3 years after Goldman cuts stake

HONG KONG (Nov 10): The Hong Kong-listed shares of Industrial and Commercial Bank of China , the world's biggest lender by market value, fell at the sharpest rate in over 3 years on Thursday after Goldman Sachs watered down its stake in the Chinese lender.

By 0215 GMT, ICBC shares had tapered losses to trade down 7.5 percent at HK$4.80. By comparison, the benchmark Hang Seng Index was down 4.5 percent. Earlier, its shares had fallen as much as 8.5 percent in early trade, its worst percentage fall since November 2008.

"Goldman's sale may have some ripple effect that may influence other foreign shareholders to consider selling," said Alexander Lee, an analyst at DBS Vickers in Hong Kong. "That said, such sales usually cause only short-term weakness, and it's better to look at the fundamentals."

Goldman sold $1.1 billion worth of ICBC shares, less than originally expected. It had sold 1.75 billion shares at HK$4.88 each, putting the total deal size at HK$8.54 billion, a person with direct knowledge of the terms told Reuters.

In Shanghai, ICBC's shares were down 1.6 percent. The domestic A-share market is typically less influenced by news outside of China because it is largely made up of retail investors.

The shares were sold at a 6 percent discount to ICBC's closing price of HK$5.19 on Wednesday, a discount narrower than the 11 percent set by Bank of America when it sold about half of its stake in China CONSTRUCTION [] Bank earlier this year.

BAC, RBS and UBS are among the foreign banks that have sold large stakes in Chinese banks since the financial crisis. Such sales are an attractive way to raise capital or reduce earnings volatility.


The Hong Kong-listed shares of HSBC , Europe's biggest bank, saw its biggest percentage plunge in over 2-1/2-years after its third quarter underlying pretax profit fell 36 percent and it said that its bad debts in the United States had jumped.

By 0247 GMT, HSBC shares were down 8 percent to HK$62.45. This would be the biggest percentage decline since March 2009, according to Thomson Reuters data.

It also follows a similar decline on its London-listed shares on Wednesday, which fell immediately after the bank released its third-quarter earnings report when it also warned that it might leave Britain.

"The U.S. situation was probably a big surprise to most of us," said Lee at DBS Vickers. "Provisions for bad debts in the U.S. business have been falling for a few years now, and I don't think any of us expected this."

HSBC was a big lender to sub-prime borrowers in the United States after it bought Household Financial eight years ago. It has since closed the business and aims to run down its $50 billion loan book. - Reuters

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