Posted By: Madeleine Brooks
NEW YORK -- Goldman Sachs Group is considering selling part of its 4.9% stake in Industrial & Commercial Bank of China Ltd., a move that could raise more than $1 billion, according to several people familiar with the matter.
Talks between Goldman and ICBC about a sale began late last year and include potentially divesting 15% to 20% of the New York company's stake in the Chinese bank, two people with knowledge of the discussions said. Goldman's shares in ICBC are valued at about $7.5 billion. Any transaction would have to wait until late April, when a lockup on half the stake is set to expire.
The potential move comes at a delicate time for Goldman and other U.S. financial institutions that have received government aid in recent months. In addition to pressure to reduce risk taking and spending, such companies are facing tough curbs on compensation that could make it harder to keep top-performing traders and investment bankers from defecting to rivals. Since getting $10 billion in capital from the U.S. government last October, Goldman has made no secret of its desire to repay those funds. Trimming the stake in ICBC could help Goldman repay some of the aid.
Last week, China's Ministry of Finance made it more difficult for foreign institutions to buy or sell blocks of stock in Chinese financial firms, citing a need to protect national assets. The new rules, to take effect May 1, include a requirement that trades in Chinese financial firms by foreigners must be executed on a stock exchange at prevailing market prices. It is unclear whether those rules would affect Goldman's possible sale.