US banking giant Citibank on Monday confirmed it will increase its stake in Shanghai Pudong Development Bank to 19.9 percent, an indication that it is also ready to acquire a stake in another Chinese bank.
By increasing its current 4.6 percent stake in Shanghai Pudong to 19.9 percent, Citibank will hit the ceiling for investments that foreign banks are allowed to make in Chinese banks.
The official Shanghai Securities News, citing industry sources, said the deal terminates Citibank's exclusivity arrangement with Shanghai Pudong, which would allow it to take a stake in Guangdong Development Bank.
Earlier this month, a bank source said Citibank's parent company, Citigroup, had outbid other would-be investors for a stake in Guangdong Development Bank, but the local lender had not yet decided which foreign partner to pick. Guangdong Development Bank, which holds a much-sought-after national license, has been talking to a number of foreign and local investors to help it recapitalize ahead of the opening up of the banking sector at the end of 2006.