Goldman Sachs ponders ICBC stake

Goldman Sachs is considering buying a stake worth more than $1bn in Industrial and Commercial Bank of China ahead of a overseas listing by the country's largest lender set for 2007.

......the discussions between Goldman Sachs and ICBC were at an early stage and the size and exact value of the stake to be sold had not yet been finalised.

However, the decision by Goldman Sachs' private equity unit to consider committing more than $1bn to ICBC underlines the growing interest by international financial groups in the future potential of China's troubled state lenders.

Credit Suisse and American Express, among others, are believed to be considering bidding to become a "œstrategic investor" in ICBC before its IPO.

Goldman Sachs' rivals are expected to argue that its interest in ICBC could create a conflict interest with an advisory role on BoC's $3bn-$4bn initial public offering.

BoC is expected to appoint banks to underwrite the IPO within the next few weeks, with Goldman Sachs and UBS believed to be the front-runners. People close to the situation said Goldman Sachs was likely to rebuff allegations of a conflict of interest, arguing that its private equity unit is separate from its equities division.

In addition, ICBC's listing is likely to be at least one year later than BoC's, reducing the risk of any conflicts of interest.

Goldman Sachs' involvement as one of the underwriters for this year's $2.2bn Hong Kong listing of Bank of Communications, China's fifth largest, did not appear to have damaged its chances of working with BoC.

However, taking a stake in ICBC could prompt the Chinese authorities to restrict Goldman Sachs, which is also advising privately owned Minsheng Bank on an IPO, to just one of the "œBig Four".....

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