Temasek ups investment in Chinese banking industry

Singapore’s sovereign wealth fund casts a huge vote of confidence in China’s economy.

Temasek Holdings has bought US$2.3 billion worth of shares in the Industrial and Commercial Bank of China Ltd, the world’s largest bank by profit and market capitalization and one China's “Big Four” state-owned commercial banks.

The purchase acquired 3.55 billion H-shares from Goldman Sachs, or about 1% of ICBC. Temasek now owns a 1.3% stake in the state-owned bank.

Analysts said the huge buy-in gives Temasek deeper roots in China’s banking industry dominated by the Big Four banks despite recent government statements about the wisdom of breaking the monopoly of these banks, and a continuing public anger over excessive bank fees and atrocious customer service.

Temasek has holdings in two more state-owned banks: Bank of China and China Construction Bank. The ICBC purchase is also shows Temasek remains positive about the bank and China's long-term development.

"Temasek has laid out its strategy before on where it thinks growth is. Within Asia, China anchors the growth, so Temasek is putting money where its mouth is," said Song Seng Wun, an economist at CIMB.

Temasek manages about US$150 billion in assets worldwide. It is fully owned by Singapore's Ministry of Finance.