Under the transaction, DBS will acquire 383.6 million shares in Shenzhen Rural Commercial Bank from Shenzhen Huaqiang for a total of RMB2.01 billion ($376 million) or RMB5.25 per share. The consideration is equivalent to 1.05 times of the book value per share for the latest available quarter. The transaction will be funded using internal cash resources. It will have a less than 0.1 percentage point impact to DBS’s consolidated capital ratios.
According to DBS, the transaction does not require the bank to commit any technology resources. DBS has been banned by the Monetary Authority of Singapore (MAS) for six months from Nov 1 from making non-essential IT changes to ensure that keeps a “sharp focus” on restoring the resilience of its digital banking services.
The transaction is expected to be immediately accretive to DBS’s earnings and return on equity (ROE).
Shares in DBS closed 37 cents higher or 1.12% up at $33.41 on Dec 29.
