Goldman hired to advise on Hong Kong's Wing Hang Bank sale: sources
(Reuters) - Goldman Sachs Group Inc (GS.N) has been hired by the biggest shareholder of Wing Hang Bank Ltd (0302.HK) to advise on the sale of the $4.5 billion Hong Kong lender which promises buyers a route into mainland China.
A sale would be the second this year for a family-owned Hong Kong lender after Chong Hing Bank Ltd (1111.HK), with suitors attracted by the prospects of overseas expansion as well as the city's rapidly growing offshore yuan fixed-income market.
The family of Chairman Patrick Fung as well as a family-linked affiliate and Bank of New York Mellon Corp (BK.N) - which own a combined 45 percent of Wing Hang - said in September they had received preliminary offers from third parties that they did not identify.
Suitors preparing to bid in mid-December include Singapore's Oversea-Chinese Banking Corp Ltd (OCBC.SI), China's Anbang Insurance Group and Agricultural Bank of China Ltd (601288.SS), and Canada's Bank of Nova Scotia (BNS.TO), two people familiar with the matter told Reuters.
Wing Hang expects a price equivalent to about twice its book value, one of the people said, valuing the sale at just over $5 billion. The bank's stock currently trades at 1.71 times its book value.
At $5 billion, the transaction would be the second-biggest for an Asian bank this year, behind the $5.6 billion Japan's Mitsubishi UFJ Financial Group Inc (8306.T) paid for the majority of Thailand's Bank of Ayudhya PCL BAY.BK.
Wing Hang shares were up 3.5 percent on Wednesday afternoon, with the sign of progress in the sale process offering investors encouragement. By comparison, Hong Kong's benchmark Hang Seng index .HSI was down 0.6 percent.
In October, a trading arm of China's Guangzhou city government agreed to buy three quarters of Chong Hing Bank for about $1.5 billion, or a price-to-book ratio of 2.08 which analysts regard as a benchmark for future deals.
Shares of Hong Kong's family-run banks have recovered from a selloff after the financial crisis, encouraging owners to consider selling. The index tracking the performance of Hong Kong financial institutions .HSNF has more than doubled after hitting a multi-year low in March 2008.
The small and mid-sized lenders operate in a challenging market dominated by HSBC Holdings PLC (HSBA.L), Standard Chartered PLC (STAN.L) and Chinese banks. Competition has pushed their return on equity to 9 percent from about 20 percent in 2001, according to Bank of America Merrill Lynch.
But financial institutions looking for a gateway into China's banking market may have to act quickly because there are only three family-run banks left - including the biggest, Bank of East Asia Ltd (0023.HK), and smallest, Dah Sing Financial Holdings Ltd (0440.HK) - compared with at least six a decade ago.
Buying Wing Hang would give the successful bidder access to the bank's 70-plus branches and offices in Hong Kong, Macau and mainland China, as well as a spring board from which to launch an offshore yuan business.
A Wing Hang spokeswoman declined to comment on the hiring of Goldman, pointing to a statement the bank issued in October saying shareholders were in talks with independent third parties and that no agreements had been reached.
A Goldman spokesman in Hong Kong declined to comment. Bank of Nova Scotia and OCBC declined to comment, while Anbang and AgBank were not immediately available to comment.
NEW YORK - U.S. stocks edged modestly lower on Monday, and the S&P 500 held near record highs, as investors largely shrugged off unexpectedly weak data in China. | Video
- U.S. small businesses borrowed more money in January than they did a year earlier, signaling continued growth in the economy despite a spate of cold weather that has been blamed for weakness in many other indicators of activity.
BEIJING/HONG KONG - China reiterated its opposition on Thursday to a European Union plan to limit airline carbon dioxide emissions and called for talks to resolve the issue a day after its major airlines refused to pay any carbon costs under the new law.