June 08, 2009

China's Ping An Insurance (Group) (601318.SS) and Shenzhen Development Bank (000001.SZ) are in talks over a potential tie-up, sources close to the deal said, as the foreign-controlled Shenzhen bank looks for a long-term strategic partner.A tie-up being discussed as recently as a week ago would see Shenzhen Development Bank issue new shares, which Ping An would then buy to become the lender's largest stakeholder, a source close to Shenzhen Development Bank said, asking not to be named.

A successful tie-up could eventually lead to a merger of Shenzhen Development Bank with Ping An's own smaller bank, industry experts said."But this deal will be very difficult to achieve," said the source.Both Ping An and Shenzhen Development Bank's shares were suspended on Monday pending announcements, the companies said.Shenzhen Development Bank has been seeking new investors as U.S. private equity firm TPG Capital [TPG.UL], the biggest shareholder, wants to sell its 17 percent ownership as a lock-up of shares lapses next year.