Citigroup set to clinch $3 billion Guangdong Bank deal

Mumbai: US financial services giant Citigroup Inc is all set to sign an agreement to take control of China's Guangdong Development Bank, reports quoting banking sources said.

The deal will give Citigroup and partners China Life Insurance Co and IBM access to 500 banking outlets in a market with 14.5 per cent annual loan growth rate.

Citigroup bid for about $3 billion beating rivals Societe Generale SA and China's Ping An Insurance (Group) Co. in the 16-month race to acquire 85 per cent of Guangdong Development.

New York- based Citigroup will purchase 20 per cent of the company, based in Guangdong province bordering Hong Kong.

London-based HSBC Holdings Plc and Bank of America Corp. of Charlotte, North Carolina, are among overseas firms that have spent more than $17 billion in the past two years to buy stakes in Chinese banks.

Though the bank is saddled with bad loans, the opportunities it offers are a bigger draw. Bad loans accounted for 21.9 per cent of total lending at the end of 2003, the latest figure from the company.