UPDATE 2-HK's BEA shares soar on suitor talk, but hurdles remain

* BEA shares soar as much as 26 pct over 2 days on M&A talk

* Guoco bid would face anti-trust issues in Malaysia

* Spain's Criteria stake capped at max 20 pct under BEA deal (Recasts with comments from BEA, Guoco)

By Alison Leung and Doug Young

HONG KONG, Nov 12 (Reuters) - A battle for control could be brewing for Hong Kong's No.5 bank, Bank of East Asia (0023.HK), pitting one of the former British colony's oldest families against newer interests from Europe and Southeast Asia.

But any bid could face a number of obstacles, including anti trust laws in one potential suitor's home market, and a previous agreement by the other not to launch a hostile bid for the company.

Rumours that Malaysia-controlled conglomerate Guoco Group (0053.HK) could be interested in BEA -- which saw a run on its deposits just a year ago at the height of the global financial crisis -- have sent the bank's shares up as much as 26 percent in the last two days.

Spain's Criteria CaixaCorp CRIT.MC, BEA's current largest single stakeholder with 9.04 percent of its shares, could also try to increase its stake in the bank.

But a Guoco purchase of BEA -- which owns 20.5 percent of Malaysia's AFFIN Banking Group -- would violate Malaysia laws prohibiting one group from owning two banks in the country. Guoco's owner, Quek Leng Chan, already owns a Malaysian bank through his Hong Leong group.

On the other hand, Criteria CaixaCorp signed a strategic agreement with BEA in June under which the Spanish bank agreed it would not increase its interest to more than 12.5 percent of BEA without the Hong Kong bank's approval. The agreement also capped Criteria's total holdings in BEA at 20 percent.

BEA itself said it was unaware of any reason for the huge rise in its stock price.

"The bank confirms that there are no negotiations or agreements relating to intended acquisitions or realisations ... which is or may be of a price-sensitive nature," BEA said in a statement.

'STRATEGIC INVESTMENT'

Founded in 1918 by Li Fook Wo and Li Koon Chun, BEA is Hong Kong's first Chinese-owned bank and one of its most respected banks. The company's current Chairman David Li is one of the founder's grandsons, educated at Cambridge and appointed an Officer of the Order of the British Empire in 1991.

David Li, together with his family, control about 14 percent of the bank through their disclosed holdings, but with the support of friendly shareholders, that figure could rise to as much as 30 percent.

BEA shares rose as much as 9.4 percent on Thursday, bringing their gains to as much as 26 percent since the close of trading on Tuesday. Shares gave back much of the Thursday gains in the afternoon session, ending up 2.1 percent at HK$34.05.

Guoco disclosed last week that it had increased its share in BEA to more than 8 percent, making it the bank's second-largest single shareholder after Criteria CaixaCorp.

The company said on Thursday its BEA stake remains one of its strategic investments under its principal investment business. "We have no comment on other rumours," Guoco said in an email reply to Reuters.

Guoco previously owned more than 70 percent of Dao Heng Bank in Hong Kong, but the bank was sold to Singapore's DBS (DBSM.SI) earlier this decade for HK$44.3 billion.

"Whether Guoco acquires BEA in the end or not, the rumour will provide upside to the share price," said Conita Hung, Delta Asia Financial head of equity markets.

"Guoco has a lot of cash and has left the Hong Kong banking market, so it wouldn't be a surprise if they want to make a comeback. But it's not easy for them to take over BEA."

BEA's 15.2 percent stock jump on Wednesday was its largest for a single day in 11 years, with its market value jumping by more than HK$1.3 billion ($176 million).

Shares of BEA, a leading local lender, have doubled this year, but are still down 30 percent since the end of 2007 after the bank suffered a bruising 2008. (Additional reporting by Julie Goh in Kuala Lumpur and Clare Jim in Hong Kong; Editing by Muralikumar Anantharaman)