DBS Deepens Roots in China

The bank will accelerate its expansion in the rapidly growing Greater Bay Area with a stake in Shenzhen Rural Commercial Bank.

DBS has entered into an agreement to acquire a 13 percent stake in Shenzhen Rural Commercial Bank in a deal valued at RMB 5.286 billion ($813.2 million), as part of its strategy of investing in its core markets, the bank announced on Tuesday evening.

The deal for 1.35 billion new shares at RMB 3.91 ($0.60) per share, representing 1.01 times the book value per share as of 31 December 2020, will make DBS the largest shareholder of SZRCB. DBS will use internal cash resources to fund the investment, which is expected to complete when the deal is approved by regulatory authorities in China.

Established in 2005, SZRCB currently operates one of the largest bank branch network in Shenzhen, with 210 branches and over 3,600 employees servicing over 5 million active retail customers and over 170,000 active corporate customers.

Approximately 40 percent of its loans are in the retail segment and the remaining 60 percent are in corporate segment, largely to Shenzhen-based small-and-medium-enterprises. The bank has RMB 519 billion in assets and RMB 404 billion in deposits, and generated RMB 4.8 billion in net profit as of 31 December 2020.

We see this as a highly complementary strategic partnership that will allow us to double down on the GBA and leverage on SZRCB’s local network and know-how to deepen DBS’ GBA strategy. At the same time, we would be able to support the continued growth and digital transformation of SZRCB through our regional presence and digital capabilities, Piyush Gupta, DBS CEO, said in the announcement.