The acquisition expands the lender’s exposure to China’s greater bay area.

Singapore’s largest lender DBS Bank has acquired an additional stake in Shenzhen Rural Commercial Bank (SRCB), increasing its stake from 16.7 per cent to 19.4 per cent, it announced in a bourse filing on Monday (Jan 27).

The investment is said to be in line with DBS Group’s strategy to invest in its core markets and expand its exposure to China’s greater bay area.

DBS first acquired a 13 per cent stake in SRCB in October 2021 and increased its investment to 16.7 per cent in January 2024, after receiving the requisite regulatory approvals in December 2023. The lender had acquired Shenzhen Huaqiang Asset Management’s stake of 383.6 million SCRB shares at 5.25 yuan (S$0.98 at the time) a share.

In November 2024, DBS entered into agreements with Shenzhen Shekou Dawah Real Estates Development and Shenzhen Shekou China Merchants Harbour Engineering to acquire their combined 2.71 per cent stake in SRCB.

Under this transaction, DBS acquired 281.6 million SRCB shares at a price of 5.67 yuan a share, which represents 1.05 times the book value per share of SRCB as of the third quarter of 2024. The total consideration for the acquisition amounted to 1.6 billion yuan.

The transaction will be funded using internal cash resources and was negotiated on a willing-buyer, willing seller basis, considering the book value of SRCB, among other factors.

The acquisition is said to have a minimal impact of under 0.1 percentage points on the consolidated capital ratios of DBS Group Holdings and its subsidiaries. It is expected to be immediately accretive to earnings and return on equity.