(Bloomberg) — China Life Insurance Co., the nation's largest insurer, agreed to buy Citigroup Inc.'s stake in China Guangfa Bank Co. for 19.7 billion yuan ($3 billion).
China Life will also acquire a 3.6 billion yuan stake from International Business Machines Corp., it said in a Hong Kong exchange filing Monday. The purchases will boost China Life's holding in the lender to 43.7 percent from 20 percent, making it the single largest investor, according to the filing.
The sale follows Deutsche Bank AG's December agreement to sell its 20 percent stake in Huaxia Bank Co. to PICC Property & Casualty Co. as the German lender seeks to divest assets to help improve its financial strength. Lenders are discouraged from holding minority stakes in other banks under the more stringent capital requirements of the so-called Basel III regime.
The price values Guangfa Bank at about 1.01 times last year's book value, a person familiar with the matter said, asking not to be identified as the information is private.
