Chong Hing Bank Ltd. (1111), the Hong Kong lender partly owned by the Liu family, is active in helping its owners find opportunities, Chief Executive Officer Lau Wai-man said, after his predecessor’s exit sparked takeover speculation.
An acquirer could be found for all or part of the bank, depending on the current shareholders’ decision, Lau said. Chong Hing said Nov. 28 that Liu Lit-chi, the 73-year-old former CEO and a member of the founding family, would step down after more than 50 years at the bank.
The shares jumped 11 percent the next day, after Lau, who’s not related to the founders, was named to take over. Family- owned banks in Hong Kong have drawn interest from buyers including China Merchants Bank Co. (3968), which paid $4.7 billion in 2009 for the Wu family’s Wing Lung Bank Ltd. Liu Chong Hing Bank was founded in 1948, and dropped the family name in 2006.
“We have been active,” Lau said in a briefing today when asked whether the lender’s stance toward a possible sale had changed. “As the management of Chong Hing, we seek to help our shareholders to get good opportunities, and that includes chances for an acquisition, cooperation or mergers.”
The number of publicly traded family-run banks in Hong Kong, China’s biggest offshore yuan market, has fallen to four from six more than a decade ago as Wing Lung and Asia Financial Holding Ltd.’s banking unit were acquired. Bank of East Asia Ltd., Dah Sing Banking Group Ltd. and Wing Hang Bank (302) Ltd. are also family run.
“I think it’s more likely for Chong Hing to be put up for sale as a whole,” Ivan Li, deputy head of investment advisory at Kim Eng Securities Hong Kong Ltd., said by telephone today. “Getting a partial stake in a small Hong Kong bank wouldn’t help much for a Chinese bank that wants to expand overseas via Chong Hing, or a foreign bank that wants to tap into China.”
China’s cash-rich lenders are seeking growth abroad. Industrial & Commercial Bank of China Ltd., the nation’s biggest lender, in 2000 paid HK$1.8 billion ($232 million) for Union Bank of Hong Kong. Six years later China Construction Bank Corp., the second largest, bought Bank of America Corp.’s Hong Kong and Macau unit for HK$9.7 billion.
“It’s most appropriate” for Chinese banks looking to expand abroad “to merge or cooperate with Hong Kong banks, at least in terms of the integration of culture,” Lau said.
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