HK family-run banks, suitors seen more likely to wed

[CityFarmer]

The same happened for local banks, which came under pressure to consolidate in the early 2000s. OUB was the victim, as the smallest among the local banks.

HK family-run banks, suitors seen more likely to wed

HONG KONG — Family-run banks in Hong Kong, regarded as attractive takeover targets because they offer a gateway to the Chinese economy, are now seen more likely to wed with their suitors as they come under pressure from new rules requiring higher levels of capital, with Wing Hang Bank the latest to come under the spotlight.

Wing Hang shares surged as much as 49 per cent yesterday to HK$124.70 (S$20.30), after it said on Monday that its main shareholders, which include the Fung family led by Chairman Patrick Fung, and BNY International Financing Corp, who jointly own 45 per cent of the bank, had received preliminary bids. Wing Hang did not identify the potential buyers.

If a deal goes ahead, the buyer would be required to make a general offer to the rest of the shareholders under Hong Kong takeover rules. The stock ended 39.4 per cent higher at HK$116.80, giving the bank a market capitalisation of HK$39.5 billion.

The offers for Wing Hang come just one month after rival Chong Hing received takeover approaches, including one from a company controlled by a Chinese city government, according to a person familiar with the matter.

Chong Hing, Hong Kong’s smallest family-run bank, rose 3.3 per cent to HK$32.75 yesterday, extending a 10 per cent gain on Monday after the Oriental Daily newspaper reported that the sale of a stake may be decided this week.

Shares in the other family-run banks also soared yesterday, with Dah Sing jumping 17.7 per cent and Bank of East Asia climbing 5.7 per cent.

China’s economic might and the healthy growth in the offshore yuan loan market have made Hong Kong’s mid-sized banks increasingly attractive for foreigners looking to expand into the mainland and for mainland Chinese banks to branch out beyond their home turf.

The offers for the two banks also come at a time when cross border lending in Asia, especially that routed through Hong Kong, had risen 11 per cent in the January to July period, driven by growth in trade finance, JP Morgan said in a report last week.

At the same time, new Basel III rules and competition from bigger rivals like HSBC and Standard Chartered Bank have given controlling shareholders more incentive not to hold out for extra-lofty premiums that other family-run banks commanded before the global financial crisis.
http://www.todayonline.com/business/hk-f...likely-wed

[CityFarmer]

Further update on the topic...

HK family banks may be sold as valuations recover

HONG KONG — Some of Hong Kong’s remaining family-owned banks may finally be willing to sell as potential takeover valuations approach levels last seen before the height of the global financial crisis five years ago.

Shares in Wing Hang Bank have surged 42 per cent since it said last week that its shareholders were in talks with unnamed parties to sell, while those of Chong Hing Bank have risen 55 per cent since disclosing last month approaches from suitors. Both generate most of their income from traditional services such as loans, mortgages and credit cards, their latest annual reports show.

Wing Hang had a market value last week of HK$36.6 billion (S$5.9 billion), while Chong Hing was valued at HK$15.5 billion.

Hong Kong’s banks are attracting suitors as the city’s role as the largest offshore yuan centre draws companies seeking financing. Outstanding yuan-denominated loans in Hong Kong surged to 113 billion yuan (S$23 billion) in July from 1.8 billion yuan in 2010, the Hong Kong Monetary Authority said.

The “offshore yuan business offers good growth opportunity to Hong Kong banks”, said Hong Kong-based Kathy Xu, investment manager at Aberdeen Asset Management, which oversees about US$318 billion (S$397 billion) of assets worldwide.
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http://www.todayonline.com/business/hk-f...ns-recover