CCB to drop Citigroup

| June 3, 2005 | 0 Comments
CCB to drop Citigroup

It is looking more and more likely that China Construction Bank (CCB) will drop Citigroup as an advisor in its initial public offering, which is expected to take place before the end of the year in Hong Kong.

In past weeks, Citigroup has been excluded from meetings planning for the IPO.

Sources close to the deal have indicated that CCB is unhappy with Citigroup because it has failed to follow through on a promise to purchase US$1 billion in shares in the Chinese bank.

However, reports are that Citigroup did not confirm its promise, making it unclear just how serious its offer to invest in CCB was.

If Citigroup is indeed dropped as an advisor to the government-owned bank, it stands to lose fees in excess of US$87 million.

At any rate, the relationship between CCB and Citigroup has been beset with allegations of misconduct, with both Citigroup’s head of China investment banking and the chairman of CCB having departed under suspicion of wrongdoing.

CCB is now believed to be in negotiations with the Bank of America, which is said to have offered to buy a 5 percent stake in CCB for around US$1.2 billion.

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