Canada's Scotia buys stake in Bank of Guangzhou

AP News
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Posted: Sep 09, 2011 5:39 AM

Canada's Bank of Nova Scotia said Friday it's buying a stake in the Bank of Guangzhou for Canadian dollars 719 million ($727 million), its second stake in a Chinese bank.

Scotiabank said it was chosen as the successful bidder for the 20 percent stake, the maximum share that foreign banks are allowed to own under Chinese regulations.

The Chinese bank is the country's 29th largest and has 84 branches and offices. It's based in bustling Guangzhou, capital of affluent Guangdong province, which neighbors Hong Kong. The bank is not publicly traded and is mostly government owned.

The purchase still needs regulatory approval and is expected to be completed in December.

The Toronto-based bank, Canada's third largest, is one of a number of foreign banks that have sought footholds in China's expanding banking and financial-services sector.

"Asia is a region of strategic importance for Scotiabank and enhancing our investment in China supports our long-term growth strategy," President Rick Waugh said in a news release.

Scotiabank also owns 14.8 percent of Xi'an City Commercial bank and is waiting for approval to raise its stake to 18.1 percent. It has been in China since 1982 and also operates in nine other countries in the Asia-Pacific area.