DBS seeks profit in Greater Bay Area with Shenzhen bank deal
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DBS seeks profit in Greater Bay Area with Shenzhen bank deal

DBS’s deal to buy 13% of a young and privately owned bank in Shenzhen highlights not only China’s vast growth opportunities post-Covid but also the potential of the cross-border Greater Bay Area.

Chinese president Xi Jinping at the opening ceremony of the Hong Kong-Zhuhai-Macau bridge, a key infrastructure in the Greater Bay Area. Photo: Reuters

DBS’s acquisition of a 13% stake in Shenzhen Rural Commercial Bank (SZRCB), announced on Tuesday, is the biggest development to date for the Greater Bay Area (GBA) – president Xi Jinping’s financial plan to bind Hong Kong together with Guangdong province.

The deal has two primary facets: size; and strategic and geographic relevance.

At Rmb5.29 billion ($814 million), it is a hefty transaction, and from the Singapore lender’s point of view, the deal is important for any number of reasons.

For one thing, the target is not a run-of-the-mill mainland lender. Unlike the vast majority of its peers, SZRCB is privately owned and professionally managed.

Founded in 2005, it has 217 branches dotted around Shenzhen, from which 3,600 staff serve five million retail customers and 170,000 corporate clients. The bank posted a net profit of Rmb4.8 billion in 2020 and boasted Rmb519 billion in assets and Rmb404 billion in deposits at the end of last year.

“It has a strong track record of profitability, achieving average RoE of over 17% since its establishment,” DBS said in a statement announcing the deal.


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