Goldman, Partners to Buy Chinese Bank Stake

Three Western partners -- a Goldman Sachs Group Inc. investment fund, Allianz and American Express Co. -- plan to buy 10% of Industrial & Commercial Bank of China, the biggest lender in the world’s most populous country, for about $3.1 billion, people involved in the deal said.

Goldman, Allianz and American Express declined to comment, as did Industrial Bank.

Goldman’s GS Capital Partners V fund, which manages money for employees and clients, will purchase $1.8 billion of shares in the Beijing-based bank, said the sources, who declined to be identified. Allianz, Europe’s largest insurer, will invest $1 billion, and American Express, the No. 4 U.S. credit card issuer, plans to commit $200 million to $300 million, they said.

U.S. and European banks have committed more than $8 billion buying stakes in China’s lenders to enter an economy that’s growing at more than twice the pace of the U.S.’ and in which household savings total $1.65 trillion. China is opening the industry to foreign competition after a $60-billion bailout of the nation’s three biggest banks.

“The tie-up would certainly help Industrial Bank expand,” said Zhang Daiwei, an analyst at United Securities Co. in Shanghai. “What it lacks is a diversified business, which would enable it to become a financial conglomerate like Citigroup, which has everything from investment banking to insurance and asset management.”

The potential deal was first reported by the South China Morning Post.