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MarketScreener Homepage  >  Equities  >  Shanghai - Hong Kong Stock Connect  >  OCBC Wing Hang Bank Ltd    0302   HK0302001547

OCBC WING HANG BANK LTD

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Singapore's OCBC in exclusive talks to buy Wing Hang Bank - sources

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01/03/2014 | 10:32am EDT
People walk under OCBC Bank signage at the bank headquarters in Singapore

(Reuters) - Singapore's Oversea-Chinese Banking Corp (OCBC) (>> Oversea-Chinese Banking Corp. Limited) has begun exclusive talks to buy Hong Kong's Wing Hang Bank (>> Wing Hang Bank, Limited) in a deal that would value the family-run lender at about $5.3 billion, two people familiar with the matter told Reuters.

(Reuters) - Singapore's Oversea-Chinese Banking Corp (OCBC) (>> Oversea-Chinese Banking Corp. Limited) has begun exclusive talks to buy Hong Kong's Wing Hang Bank (>> Wing Hang Bank, Limited) in a deal that would value the family-run lender at about $5.3 billion, two people familiar with the matter told Reuters.

OCBC, Singapore's No. 2 lender by assets, has offered about twice Wing Hang's book value, the sources said. Final terms are still being negotiated, they added, but it remains unclear when the parties are likely to clinch a deal. Binding bids were due in mid-December.

A successful deal would help OCBC to bridge the gap with its bigger rival DBS Group Holdings (>> DBS Group Holdings Ltd), which has a larger presence in North Asia. Wing Hang Bank was founded as a money changing business in 1937 by the late Y.K. Fung but has grown into a mainstream retail bank with more than 70 outlets in Hong Kong, Macua and China.

Wing Hang said in September that its biggest shareholders had received preliminary offers from un-named independent third parties, putting the bank in play. Hong Kong's Fung family and BNY International Financing Corp (>> The Bank of New York Mellon Corporation) are the biggest shareholders with a combined 45 percent stake.

Reuters previously reported that the sale process had attracted interest from suitors including Agricultural Bank of China (>> Agricultural Bank of China Ltd), Australia and New Zealand Banking Group (>> Australia and New Zealand Banking Group) and Singapore's United Overseas Bank (>> United Overseas Bank Ltd). But Wing Hang's high price expectations prompted many to drop out of the auction.

Wing Hang currently trades at a price-to-book ratio of 1.84, Thomson Reuters data show. Its book value is HK$20.4 billion ($2.63 billion), according to the latest published data.

GATEWAY TO CHINA

Hong Kong is Asia's sixth-biggest bank loan market and is attractive to foreign lenders keen to tap into the fast-growing offshore yuan fixed-income market. Hong Kong also offers a gateway into mainland China as a major source of financing for Chinese companies.

At the same time, some large shareholders in Hong Kong's domestic banks, struggling to counter the dominance of big international players such as HSBC (>> HSBC Holdings plc), Standard Chartered (>> Standard Chartered PLC) and leading Chinese lenders, are using the recent rally in banking shares to cash out of the sector.

Wing Hang shares rallied 44.6 percent in 2013, against a 12.3 percent rise in the benchmark Hong Kong share index <.HSI>, partly driven by takeover speculation. On Friday Wing Hang shares rose 0.2 percent to close at HK$117.20.

A Wing Hang sale would be the second big Hong Kong banking acquisition within a few months. In October the trading arm of China's Guangzhou city government agreed to buy three quarters of Chong Hing Bank for about $1.5 billion, the first such takeover since the $4.7 billion deal for Wing Lung Bank by China Merchants Bank in 2008.

Bloomberg earlier reported that OCBC had submitted a binding bid to buy Wing Hang, citing sources familiar with the matter.

OCBC declined to comment on Friday, while Wing Hang did not reply immediately to an email seeking comment.

Wing Hang Bank is being advised by Goldman Sachs Group (>> Goldman Sachs Group Inc) and Nomura Holdings (>> Nomura Holdings, Inc.), while Bank of America Corp (>> Bank of America Corp) is advising OCBC, sources told Reuters. ($1 = 7.7538 Hong Kong dollars)

(Additional reporting by Saeed Azhar; Editing by David Goodman)

By Clare Jim and Denny Thomas

Stocks mentioned in the article
ChangeLast1st jan.
AGRICULTURAL BANK OF CHINA LIMITED -0.32% 3.16 End-of-day quote.-14.36%
AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED 2.37% 16.85 End-of-day quote.-31.59%
BANK OF AMERICA CORPORATION -0.21% 23.87 Delayed Quote.-32.03%
BANK OF NEW YORK MELLON CORPORATION (THE) 1.34% 33.915 Delayed Quote.-33.48%
CHONG HING BANK LIMITED 0.56% 8.99 End-of-day quote.-32.30%
DBS GROUP HOLDINGS LTD 0.76% 19.89 End-of-day quote.-23.15%
HANG SENG 0.06% 23762.38 Real-time Quote.-15.76%
HSBC HOLDINGS PLC 1.10% 290.25 Delayed Quote.-51.50%
LETS HOLDINGS GROUP CO., LTD. -1.54% 10.22 End-of-day quote.69.21%
NOMURA HOLDINGS, INC. -2.23% 499.5 End-of-day quote.-11.34%
OVERSEA-CHINESE BANKING CORPORATION LIMITED 0.48% 8.45 End-of-day quote.-23.04%
RISE, INC. 0.00% 26 End-of-day quote.-13.33%
STANDARD CHARTERED PLC 2.50% 352.8 Delayed Quote.-51.68%
THE GOLDMAN SACHS GROUP, INC. -0.47% 190.54 Delayed Quote.-16.66%
UNITED OVERSEAS BANK LIMITED 0.53% 19.11 End-of-day quote.-27.64%
US DOLLAR / CHINESE YUAN RENMINBI (USD/CNY) 0.46% 6.8089 Delayed Quote.-2.26%
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Managers
NameTitle
Wu Beng Na Chief Executive Officer & Executive Director
Yuk Bun Fung Non-Executive Chairman
Frank John Wang Executive Director & Deputy CEO
Hau Yin Tse Independent Non-Executive Director
Hwee Tin Kng Executive Director
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