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BBVA to raise stake in Citic Bank to 15 per cent

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Spanish lender Banco Bilbao Vizcaya Argentaria has decided to raise its holdings in China Citic Bank to 15 per cent from 10.07 per cent.

The Chinese bank says it received a written notice from BBVA on 3 December.

BBVA will exercise an option allowed by a stock and option acquisition contract it inked with Citic Group on 22 November 2006.

The Spain-based bank will acquire approximately 1.92 billion shares of Citic Bank for about USD1.6bn, or HKD6.45 apiece, representing a ten per cent premium from the price of shares the latter issued in an IPO on the Stock Exchange of Hong Kong in 2007.

Before completion, the deal needs to gain approval from concerned authorities.

BBVA bought a five per cent stake in Citic Bank for approximately CNY5.1bn in 2006. In June 2008, it doubled the holdings to ten per cent and gained an option to buy five per cent more before 4 December 2009.

So far, BBVA has invested about CNY21.37bn in Citic Bank, with a plan to take part in the latter’s private banking operation. Both sides have extended cooperation to auto loans since May 2009, and the business will be undertaken by a 35-65 joint venture.

Currently, a foreign financial institution is required to control not more than 20 per cent of a Chinese-funded bank.

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