Goldman eyes stake in China's ICBC-report

[HenryTo]

Looks like China is very committed to developing a sound financial system going forward. No question it is a daunting task - they will need all the talent they can get from the developed world to achieve this goal.
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Goldman eyes stake in China's ICBC-report

HONG KONG (Reuters) - Goldman Sachs is eyeing a substantial equity investment in China's largest lender, Industrial and Commercial Bank of China (ICBC), a local newspaper reported on Saturday.

The U.S. company, which teamed up with German financial firm Allianz AG , has started talks to acquire stakes in ICBC, the South China Morning Post said, citing informed sources.

A Goldman spokeswoman declined comment on the report.

The size of any potential stake purchase was unclear, but the paper said it could be a multi-billion dollar investment.

The paper also cited an unidentified source as saying that Goldman's top management had been granted preliminary approval for the investment.

Other players in talks with ICBC include American Express , Fortis and Credit Suisse , the SCMP reported.

Earlier this month, the China Securities Journal said Credit Suisse First Boston (CSFB) was likely to become the first foreign investor in ICBC after the Chinese bank sets up a listing vehicle this year.

ICBC's chairman said earlier the bank was talking to foreign investors to sell a 10 percent stake by the year-end to pave the way for an initial public offering in 2006 or 2007.

ICBC, one of China's Big Four banks, won a $15 billion cash bail-out in April to help clean up its balance sheet and allow it to follow rival state-backed lenders Bank of China and China Construction Bank as they prepared IPOs.

The capital injection was made by Central Huijin Investment, which was set up in late 2003 when the government injected $45 billion in capital into Bank of China and Construction Bank.

The government is trying to shore up the debt-laden banking sector to prepare for greater foreign competition when the industry opens up wider at the end of next year.