Moody's sees stronger franchise value in Shenzhen Development Bank

Moody's affirmed Shenzhen Development Bank's Ba2 long-term foreign currency deposit Rating. It also affirmed its D- bank financial strength rating and Not Prime short-term foreign currency rating.

The outlooks for all ratings remain positive. The D- BFSR maps to a Baseline Credit Assessment of Ba3.

The positive outlook on SZDB's ratings reflects the prospect of stronger franchise value, better access to capital, and further improvements in financial performance for the bank as a member of Ping An Insurance Company of China, Ltd.


PAIG, directly or indirectly, owns 29.99 per cent of SZDB.

Currently, SZDB is in the process of obtaining regulatory approval for its proposed merger with Ping An Bank, a subsidiary of PAIG.

According to the proposal, SZDB will issue shares valued at RMB29 billion to PAIG in
exchange for PAIG's 90.75 per cent stake in PAB and RMB2.7 billion in cash, equivalent to 9 per cent of PAB. After completion of these transactions, PAIG will own about 52 per cent of SZDB.

"We expect the two banks to complete the merger, after obtaining the regulatory approval likely in 2011, at which time we will consider upgrading Shenzhen Development Bank's long term deposit rating to Ba1," says Yi Zhang, a Moody's Vice President and Senior Analyst.