Bank of East Asia Chief Increases Stake, Blames Short Sellers

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  • Chairman David Li says he bought 1 million shares Monday
  • Hedge fund Elliott Management is urging bank to sell itself

The chairman of Bank of East Asia Ltd., the Hong Kong lender targeted by billionaire Paul Singer’s Elliott Management Corp., said he bought 1 million shares of the financial institution on Monday and is considering purchasing more as short sellers target the stock.

“A lot of people have been shorting our shares,” David Li, also the bank’s chief executive, said in a phone interview Monday night. “My brother and I think our stock shouldn’t be trading at this level.”

David Li

Photogrpaher: Xaume Olleros/Bloomberg

Bank of East Asia’s shares jumped 9.2 percent to close at HK$25.55 on Monday in Hong Kong, the biggest gain since November 2009. The stock has declined about 20 percent over the past year and trades at a price-to-book ratio of 0.82, compared with the five-year average of 1.2.

Li owned 86.74 million shares of Bank of East Asia after buying 110,000 shares last week, according to disclosure filings to the Hong Kong stock exchange Friday. His brother, Arthur Li, a deputy chairman and non-executive director of the bank, bought a total of 60,000 shares last week, filings to the exchange Monday showed.

Bank of East Asia rejected earlier this month a call by Elliott Management to consider selling itself. The company did so after posting a larger-than-estimated, 17 percent drop in 2015 net income. The bank intends to focus on improving and executing on what it already has, it said Feb. 15.

Li also said the share purchases weren’t meant to defend against Elliott’s push for a Bank of East Asia sale.

“We don’t need to defend as we have enough shares,” he said. “I bought 1 million shares today. I will consider buying more. If the shares drop further, I will definitely buy more.”