McKinsey Responsible for Integration of SDB, Ping An Bank

McKinsey is drawing up the program for the assets regrouping of Ping An Bank and Shenzhen Development Bank (SDB).

In addition to the restructuring plan, McKinsey has also finished SDB’s comprehensive management system program, which is still to be finalized. This May, Ping An Insurance (Group) Company of China (Ping An, 601318.SH, 2318.HK) as the parent company of both Ping An Bank and SDB had sent a four-member team to SDB, an effort to ensure the smooth transition before the integration is completed. Still, there is no story about the management reshuffle of either SDB or Ping An Bank.

By the end of this June, the Shenzhen Branch of SDB achieved new incremental deposits of CNY 15.74 billion, a rise of 23.56% over the start of 2010; and it achieved new incremental loans of CNY 1.36 billion, a rise of 2.87% from the beginning of the year. In the same period, Ping An Bank’s Shenzhen Branch achieved new incremental deposits of CNY 6.1 billion, rising 5.87%, and new incremental loans of CNY 5 billion, up 8.61%.

The southern boomtown Shenzhen-based Ping An currently controls a 29.99% stake in SDB. Earlier, Ping An life insurance Company of China as the life insurance arm of Ping An paid CNY 6.93 billion for a total of 379 million additional shares of SDB, translating to CNY 18.26 per share. After the move, Ping An and Ping An Life take 1.045 billion shares or a 29.99% stake in the Shenzhen-based lender.

The move enables Ping An to not only expand its total assets from CNY 1 trillion up to CNY 1.6 trillion, but also realize the integrated financial services of banking, insurance and investment, industry analysts said. In the future, Ping An as the parent company is guessed to inject the assets of Ping An Bank into SDB. Actually, SDB said in an announcement that the private share placement to Ping An Life has helped raise its capital adequacy ratio up to 12%.

Earlier before the deal, JP Morgan Chase predicted that Ping An will see its earnings per share rise 9% and 24.8% respectively in 2010 and 2011. By the end of this March, Ping An had total assets of CNY 995.4 billion and another large insurer China life insurance Co. (2628.HK; 601628.SH) had total assets of CNY 1.28 trillion. This time, Ping An beat Beijing-based China Life, thanks to the assets of SDB.