THE Shanghai International Group Co has become wholly state-owned, paving the way for consolidation of its holdings in financial companies.
Its five government-affiliated shareholders gave their stakes to the city's State-owned Assets Supervision and Administration Commission, the Shanghai Pudong Development Bank said in a statement to the Shanghai Stock Exchange yesterday.
Shanghai International, which owns 33.9 percent of the bank, is the largest shareholder in Pudong Bank. The bank is the only publicly traded company in the group and Citigroup Inc has a small stake.
Pudong Bank and Shanghai International share the same chairman, Ji Xiaohui.
The Shanghai government boosted the capital of Shanghai International to 10.58 billion yuan (US$1.42 billion), the statement said.
Qiu Zhicheng, a Haitong Securities Co analyst, said the move is to centralize the stake structure of Shanghai International, which was set up in 2000.
The move itself is neutral to Pudong Bank, Qiu said. However, there is speculation the bank will be a platform to receive injections of other related financial assets under the group.
Shanghai International owns stakes in companies including Bank of Shanghai Co, Hua An Fund Management Co and Shanghai Securities Co.
Stakes in financial firms account for about 65 percent of Shanghai International's total assets. The government is planning to transform Shanghai International into a financial holding company.
Pudong Bank tumbled 4.94 percent to 52.93 yuan yesterday, while the benchmark Shanghai Composite Index dropped 4.85 percent to 5,330.02.