Anbang Insurance Group, the Chinese insurer considering a bid for Wing Hang (302) Bank Ltd., is balking at the asking price for the family-run Hong Kong lender, said two people with knowledge of the matter.
Beijing-based Anbang has indicated it’s willing to pay no more than 1.7 times the lender’s book value this year, said one of the people, who asked not to be identified because the information is private. That compares with an asking price of about two times, the people said. Wing Hang has a market value of about $4.7 billion, which is 1.7 times its estimated 2013 book value, according to data compiled by Bloomberg.
Wing Hang has also drawn interest from Singapore’s Oversea-Chinese Banking Corp. (OCBC) and Canada’s Bank of Nova Scotia, people with knowledge of the process said earlier. Hong Kong’s family-run banks, pressured by larger competitors like HSBC Holdings Plc and Bank of China Ltd., are attracting interest from acquirers as the city’s role in cross-border financing expands.
Binding bids for Wing Hang are expected during the middle of this month, although there is no definitive deadline, according to the people. Press officials at Anbang didn’t return messages seeking comment, while Cherry Yung, a Hong Kong-based spokeswoman at Wing Hang Bank, declined to comment.
Wing Hang shares fell 0.9 percent, the most in two weeks, to close at HK$117.30 today in Hong Kong. The city’s benchmark Hang Seng Index rose 0.1 percent.
Anbang, which offers insurance and asset management, is working with Deutsche Bank AG (DBK) for the Wing Hang negotiations, the people said. The insurer, whose shareholders include state-owned Shanghai Automotive Industry Corp. and China Petrochemical Corp., has 510 billion yuan ($84 billion) of assets, according to its website.
Any purchase by Anbang would require regulatory approval from the China Insurance Regulatory Commission, which adds to the risks of completing a deal and may deter Wing Hang from selecting Anbang as a preferred buyer even if it can meet the asking price, one of the people said.
Wing Hang would give a buyer a network of 70 branches spanning Hong Kong, Macau and mainland China. Its presence across southern China’s Pearl River Delta makes it a more attractive target than other smaller family-owned banks in the city, Grace Wu, an analyst at Daiwa Capital Markets Hong Kong Ltd., said Sept. 17.
Yue Xiu Group, an investment arm of China’s Guangzhou city government, agreed last month to buy a majority stake in Chong Hing Bank Ltd. (1111) for $1.5 billion. That deal marked the first acquisition of a Hong Kong lender since 2009, when China Merchants Bank Co. paid $4.7 billion for the Wu family’s Wing Lung Bank Ltd.
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