CITIC Bank 2.1 billion association unsecured credit suspense

May 11, Citic Bank (601998 ·　　SH) issued a notice to 13.563 billion Hong Kong dollar cash on the acquisition of Gloryshare Investments (hereinafter called GI) holdings of Citic National Gold 70.32% of the rights and interests.　　As a positive evaluation of CITIC Bank's huge acquisition of Citic China, a whopping HK $2.1 billion Unsecured association letter will also be quietly taking place. The short-term impact of the acquisition of negative GI is a registered investment holding company in British Virgin Is., a wholly owned subsidiary of CITIC Group, without substantial commercial operations. GI and BBVA are now holding shares in Citic 70.32% and 29.68% respectively.　　As of March 31, BBVA's shareholding of 10.07% and GI 4.93% were listed as the third to fourth largest shareholder of Citic Bank. According to the public information, Citic is an investment holding company whose business involves banks, securities and real estate. It holds 100% per cent of Citic Ka Wah Bank in Hong Kong and 40% of CITIC International Asset Management Limited (a company specializing in direct investment and asset management), and holds Citic Capital Holdings Limited (a company engaged in private equity, asset management, real estate and structured finance) 50%　　Rights. BOC International believes that the acquisition of Citic Bank in the short term some of the financial indicators have some improvement, but the improvement is extremely limited. Citic China won 12.6 billion net profit in 2008, but after deducting the one-time gain from the sale of CITIC Bank, net profit was only 1.763 billion, asset yield was 1.24% and net assets yield was 0.435%.　　Although we expect the acquisition to be completed in August, CITIC Bank's net profit for 2009 is expected to rise by 1.53%, but Citic's current low asset yield actually drags down Citic's yield, which, if given the opportunity cost of investment, has a negative impact on Citic's profitability in the short term. In addition, BOC International believes that the acquisition price is not cheap.　　At present, Citic purchase price in accordance with the 2008 adjusted net assets calculated to obtain the market net rate of 1.43 times times, in accordance with the 2008 normal net profit calculated earnings ratio of 11 times times, higher than the current valuation level of Hong Kong banks. 3 billion the letter was premeditated. In addition, the reporter noted that in the associated transaction, CITIC Bank involved a total of HK $2.1 billion related loans. Associated loans began in January this year, by Citic China as a borrower and GI and BBVA as the credit to sign the 3 billion Hong Kong dollar revolving credit financing agreement, according to the agreement GI and BBVA agreed to according to their respective holdings in Citic China,　　A revolving credit limit of HK $2.11 billion and HK $890 million is provided to Citic National gold. But only after 5 months, the GI will hold all the shares of Citic China transfer to CITIC Bank, Citic Bank is bound to undertake this revolving credit financing obligations. Citic Bank buys CITIC China gold earlier thanLast year, the plan made it conceivable that GI and BBVA signed the 3 billion-Hong Kong dollar revolving Credit agreement as a credit to the party. After the acquisition is formally completed, Citic Bank will assume the original GI promise of HK $2.1 billion obligations. Nevertheless, Citic Bank said that the terms of the 3 billion Hong Kong dollar revolving credit financing agreement were based on general commercial terms and that, under the terms of the 3 billion Hong Kong dollar revolving Credit agreement, there would not be any guarantee of CITIC Bank or CITIC Fund's assets upon completion of the acquisition,　　Since the nature of the 3 billion Hong Kong dollar revolving Credit agreement is to provide credit to subsidiaries by Citic Bank, it is not unusual to guarantee the creation of assets. Large-linked loans raise fears of "not setting a guarantee, what if in case of bad debts?" "A small shareholder in Citic Bank asked this question.　　Reporters call Citic Bank's securities department for two consecutive days without answering. A senior investment banker told the Huaxia Times Reporter: "Now is only a letter, the future occurrence of specific loans, will be specific, if all credit loans, and the occurrence of bad debts, can only be borne by the Citic bank losses."　　"China Banking Regulatory Commission in 2004 issued the" Commercial banks and insider and shareholder related transactions management measures, "the 29th expressly stipulates that commercial banks may not be issued to the relevant party unsecured loans. Linked loans are always a sensitive issue for banks, and in 2007 Citic Bank's loan balance to affiliated companies was 2.797 billion yuan, up 23.05% from the beginning of the year, accounting for 0.49% of the bank's total loans. In 2008, Citic Bank's loan balance to affiliated companies was 5.731 billion yuan, up 104.9% from the beginning of the year, accounting for 0.88% of the bank's net loans.　　Citic Bank said all of the above are normal loans.　　The reporter noted that, on the occasion of the global financial crisis caused by subprime mortgages in the United States, Citic Bank also offered annual credit to affiliated companies on December 31, 2008, with no more than 1.9 billion RMB and 66 million U.S. dollars in total credit to affiliated companies Citic Ka Wah and ka wah China. Citic Bank explained the huge credit, "from Citic Ka Wah business situation, although the impact of the crisis, structural investment losses, but the management has taken measures to estimate the size of the damage can be controlled." "If the Citic Bank's 2.1 billion-dollar revolving letter to Citic China is added, Citic Bank's 2009 associated loan will likely reach HK $7.8 billion."