China buys into Barclays
Barclays is close to raising around £10bn from the Chinese and Singaporean Governments to help finance its attempted takeover of the giant Dutch bank, ABN.
According to banking sources, the groundbreaking deal is being negotiated overnight. If it succeeds and if Barclays acquires ABN, the Chinese state would emerge with a shareholding of around 7 per cent in the enlarged group.
A smaller stake of around 3 per cent would be taken by Temasek, the investment arm of the Singaporean government.
The Asian cash will be used to help Barclays increase its takeover for ABN to around £50bn.
If Barclays fails to buy ABN, the Chinese and Temasek would take smaller stakes in the British bank.
The Chinese and the Singaporeans are paying around 740p per Barclays share, above its closing market price on Friday night of 713.5p.
The deal was arranged by the leading US private equity house, Blackstone - which recently sold a £1.5bn stake in itself to the Chinese state.
The Chinese state has $1.2 trillion dollars of foreign exchange reserves to invest, much of which has been placed in US Treasuries or government bonds. China recently signalled it would be taking a more imaginative and aggressive approach to how it invests hundreds of millions of dollars, including buying significant holdings in overseas companies.
The deal with Barclays under negotiation would be the most ambitious manifestation to date of its new boldness as an investor.
The idea that the Chinese Government could end up with an influential stake in such an important European financial institution as the merged Barclays/ABN could prove controversial.
Some Barclays shareholders may be concerned that the Chinese are buying the shares without them being offered to existing shareholdres.
Barclays will also announce that it will buy in several billion pounds of its own shares.
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This was ineviatable. China has lots of money it needs to invest and Barclays needs to grow - otherwise it risks being taken over itself.
Whether the British like it or not - we need to get used to doing business (& placing trust) in old enemies i.e., arabs buying Sainsburys, indian outsourcing business growth, china buying british banks, russia owning energy commodities that we rely on.
Unless the British adapt to the noew world - we will be left with old freinds - whose power has dwindled.
I cant imagine that existing shareholders would be too concerned about not being offered the opportunity to buy shares at 740p, when they could buy them in the open market for 713.5p.
Enemies, what enemies? This is business - we invest there, they invest here. It is how the capitalist system works.
Protectionism is a dirty word, but it might have to come to that.
How can western countries compete with an communist, anti-democratic country operating a capitalist system.
Competition is not on an equal basis.
A billion people working for slave wages, little environmental restrictions, an purposely undervalued currency, etc.
Versus highly regulated western societies with unions and minimum wages..
Something has to give.
What enemies? especially India!
I can remember meeting the then Barclays CEO in 1996 Martin Taylor who curiously enough graduated from Cambridge with a degree in Mandarin.
I asked the Bank to lend money to me for my China project but they said that China was far too risky.
Though the project was fully built, completed and profitable from my own funds see www.martinwine.cn, the bank would not lend then the cost of a return economy class ticket.
Like me Mr Taylor was a forward thinking man and it has taken the bank just over 10 years to wake up to the opportunity of doing business with China, but I thought they said it was too risky or just maybe they will find out just how risky it is.
Unfortunately I have never invested in Holland so on where the money is going may be good.
I learned from my own business to be careful in choosing the right partners. Watch your space !
we are to naive, this is not capitalisme, this is about chenese goverment not private companies!!!!!! and for me it is dangerous. Moreover the chenese goverment appears warlike!!!!!
China is not respecting international world trade, many sectors are closed (financial sector, building,service...) So why we should be opened to them give me one reason (a good one)
Only a strong Europe can prevent this operation, a united continent can say to the WTO : "if we opene our market than you should do so otherwise no transaction and no technology transfer" and we will see the reaction !!!!!!
But this is not the case what a shame !!! On day we will pay our division in this continent
It's a business!!!!! not a government issue!!!! If share price is not attractive enough, no one will buy it. China respect world trade. They pay money and deserve it.
Don't complain, no one force our company to invest there, but why more and more company open factory in China? We should look after the reason from ourselves. If you don't like made in China, please don't buy goods from China, and tell everyone do that. And then no boss will invest there.
But I believe it's important, the reason is people are selfish. People always enjoy cheap and goods products, don't muchcare where it is from.
If you also buy chinese products, please shut your complaint, because you are supporting communist.
Why most of people assume China is a threat to world? From history, many westen country, specially Britain, invaded and governerd many, many foreign country, but China never invaded any other country, on the contray, she often was invaded by other national.
So I think it's unfair to attack China as a threat to world peace. If any one still think so, could you give a reason, thank you!
Please feel lucky that Chinese is governerd by communist. Communist prevent China from becoming a strong country due to anti-democratic policy, and China will never gain the capbility to be as strong as us.
Let us image a democratic China: massive people have free thought, and then create many breakthroughs in a lots field, people are much rich. Of course, they consume much more energy, produce much more carbon gas. Our advanced technology what we are proud will be defeated by China. All of us will lost job.
Don't unbelieve it! Please see Japan, 100m people create massive technology in so little land. If China have same political system, you can't image how massive technology can be created by 1.4b people in so huge land.
Do you like China dominate world even she is a demecratic country? If not, you should support current regime in China, because it keep China behind us.
I'd like Paul (number 9) to explain his version of history to the Dalai Lama!
And I'm sure the people of Taiwan could give you reasons to doubt your benevolent view of Chinese politics.
Some trader is making a million pound bonus out of the misery he or she has imposed on the individual, because of irrisponsible lending by the money men.When profits are threatened the money men look to cause problems to make the market WORK, and out of that work, someone falls fowl of the system, others make huge gains, no matter what the money men say, there is always a Dubloon to be made somewhere.Its called market manipulation, another Neilson maybe
Exactly the same shystem for sub prime loans has been operating in the UK in relation to so called 'non status. mortgage of which there are many many thousands out there. The borrower can typically borrow up to 85% or even 90% of the property value by simply dweclaring that he or she earns any figure. It is never checked. The UK remortgage market is riddled with liars loans. So why no US style problem here? Because the market has been continually on the up for several years, but should a dip in prices occur, these liars loans will soon surface just as in the US. Is this why Northern Rock in particular has been suffering a down turn in its share price, coupled with its practice of lending up to 130% loan to value to fund cars and furntiure and all at the same low rate as the basic mortgage.
As long as UK prices are rising or stable, all will be well but if they start to dip expect a migration of borrowers into the rental sector and a home grown crisis, because many of these borrowers are also up to their necks in unsecured debt.