/ 25 October 2007

Bank shares leap on Standard Bank news

South African bank shares leapt on Thursday after reports that China’s biggest bank, Industrial and Commercial Bank of China (ICBC), has agreed to buy a stake in Standard Bank, in a deal reported to be worth $5,5-billion.

Trading in Standard Bank shares was halted ahead of the release of a statement by the bank on the outcome of negotiations it said it has been holding.

Standard Bank, Africa’s biggest banking group by assets, is due to announce the outcome of talks that it has said might have an effect on its shares if successfully completed. The announcement is due at a press conference at noon.

A source familiar with the situation told Reuters earlier that ICBC has agreed to buy a large stake in the group. Ft.com, citing a banker close to the deal, reported the transaction could be worth $5,5-billion.

It will get two seats on the board, the banker said, adding that half the stake would come from the issue of new shares and half by the acquisition of existing shares, according to the website.

However, it is understood the South African Reserve Bank will cap the percentage the ICBC can go to at about 25%, said Ft.com.

The JSE’s bank sector raced 2,5% higher with financial holding company RMB Holdings leading the charge, up 5,06% to R37,20 by 7.24am GMT.

FirstRand added 4,73% to R25,45, Nedbank rose 4,23% to R146,75, and Absa gained 3,42% to R130.

The JSE Securities Exchange said it had also halted trade in Standard Bank shares and other financial instruments of the group pending the release of an announcement. – Reuters