Anbang Buys China Merchants Stake Amid Doubts on Wing Hang

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China Merchants Bank
People walk past a China Merchants Bank Co. branch in the central business district of Guangzhou. Photographer: Brent Lewin/Bloomberg

Anbang Insurance Group, the Chinese insurer said to be balking at the asking price for Hong Kong’s Wing Hang Bank Ltd., bought a 13.6 billion yuan ($2.2 billion) stake in China Merchants Bank Co.

Anbang purchased 1.13 billion Shanghai-traded shares of China Merchants Bank at an average price of 12.07 yuan each, raising its stake to about 5 percent, according to a Shanghai exchange filing today.

“Judging by the size of the investment, this is more than a portfolio investment,” Du Changchun, an analyst at Northeast Securities Co. in Shanghai, said by telephone. “The group might have a larger plan in mind. This is probably a step toward building a comprehensive financial platform that covers banking, insurance and securities.”

Anbang last week indicated it won’t pay more than 1.7 times the book value of Wing Hang, the second-largest family-run Hong Kong lender, two people with knowledge of the matter said at that time. That’s less than the 2 times book value that’s being sought, the people said. Shares of Wing Hang fell for a fourth day in Hong Kong.

Phone calls to Beijing-based Anbang’s media relations department weren’t returned today. The company’s property and casualty insurance unit made the acquisition.

Property Purchase

Anbang said last week it increased its stake in Gemdale Corp., a Shenzhen-based residential developer, to 5 percent. Anbang’s property and casualty insurance unit bought 4.5 million Gemdale shares, worth 27.7 million yuan, according to a Dec. 3 exchange filing from the property company.

Shares of China Merchants Bank, the nation’s sixth-largest lender by market value, fell 1.4 percent to HK$15.86 in Hong Kong as the benchmark Hang Seng Index dropped 1.7 percent.

Wing Hang shares lost 1.4 percent to HK$111.10, the lowest close since Nov. 27.

The bank also drew interest from Singapore’s Oversea-Chinese Banking Corp. and Canada’s Bank of Nova Scotia, people with knowledge of the process have said. The Hong Kong lender, with a market value of $4.4 billion, has a network of 70 branches spanning the city, Macau and mainland China.