Baoshan Iron & Steel Co to acquire 10 percent stake in a  Shanghai rural bank

The stake in Shanghai Rural Commercial Bank Co helps the steelmaker to diversify into banking

Shanghai-listed Baoshan Iron & Steel Co will acquire a 10 percent stake in Shanghai Rural Commercial Bank Co for around 4.6 billion yuan (US$699 million) as it diversifies into banking, the company said today.

It will buy the stake from Australia and New Zealand Banking Corp, and Baosteel (Baoshan Iron & Steel Co’s parent) hopes the investment will help it “win more profit in non-steel business,” according to its statement to the Shanghai Stock Exchange. The stake is worth around 4.6 billion yuan.

SRCB, a government-backed bank with a registered capital of 5 billion yuan, has nearly 350 outlets. ANZ has invested A$568 million (US$454 million) in SRCB since it became a shareholder in 2007.

Baosteel said, in a recent interview, that the planned investment is worthwhile. Although it is Baosteel’s first deal in the banking sector, the steelmaker started a financial business in 2007 when it set up Huabao Investment Co whose scope covers trust, fund and securities.

While Baosteel suffered a loss of 8.45 billion yuan in the steel business in 2015, its non-steel business contributed nearly 10 billion yuan to its profit. Huabao alone reaped 2.8 billion yuan in profit in 2015.

SRCB, which plans to list by mid-2019, reaped 5.9 billion in net profit last year, up 5 percent from a year earlier.

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