Chong Hing Bank Advances as CEO Hints at Sale: Hong Kong MoverStephanie Tong
Chong Hing Bank Ltd., the Hong Kong lender partly owned by the Liu family, rose in local trading after its chief executive officer said the company is open to proposals from prospective buyers for all or part of the bank.
“We seek to help our shareholders to get good opportunities, and that includes chances for an acquisition, cooperation or mergers,” CEO Lau Wai-man said late yesterday. The shares jumped 9.6 percent to HK$17.30 at 10:43 a.m. local time, the biggest intraday gain since Nov. 30.
Takeover speculation has mounted since November, when Lau was named to replace his predecessor Liu Lit-chi, a member of the founding family who spent more than 50 years at the bank. The number of publicly traded family-run banks in Hong Kong has fallen to four from six more than a decade ago after attracting buyers including China Merchants Bank Co.
“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 phone yesterday. “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.”
The stock has climbed about 26 percent since late November, when the company said that Liu would step down and appointed Lau, who isn’t related to the founders, to take over.
“We have been active,” Lau said at a briefing in Hong Kong, when asked whether the lender’s stance toward a possible sale had changed. He said it’s 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.”
Liu Chong Hing was founded in 1948, and dropped the family name in 2006. Bank of East Asia Ltd., Dah Sing Banking Group Ltd. and Wing Hang Bank Ltd. are also family run. China Merchants paid $4.7 billion in 2009 for the Wu family’s Wing Lung Bank Ltd.
Chinese banks are seeking growth outside of the mainland. Industrial & Commercial Bank of China Ltd., the nation’s biggest lender, paid HK$1.8 billion ($232 million) in 2000 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 not easy for the Hong Kong units of Chinese banks to expand in the city organically, given that the market is “competitive and mature,” said Grace Wu, an analyst at Daiwa Capital Markets Hong Kong Ltd. “They may want acquisition opportunities to speed up the process.”