AIG to sell HK consumer finance operations to CCB

By Samuel Shen and Jacqueline Wong

SHANGHAI (Reuters) - American International Group (AIG.N), seeking to raise cash to repay bail-out loans, has agreed to sell its Hong Kong consumer finance business to China Construction Bank (CCB) (0939.HK), the country's second-biggest lender.

CCB Asia will buy 100 percent of AIG Finance (Hong Kong) Ltd for $70 million in cash in a deal that includes repayment of intra-group indebtedness and deposits of about $557 million, the two companies said on Wednesday.

The acquisition "is a significant strategic move for CCB (Asia) as we expand our consumer finance business in the Hong Kong market," CCB (Asia) President and Chief Executive Officer Charles Ma said in a statement.

"We strongly believe that the acquisition will benefit us in the growth and diversification of our consumer loan portfolio, and will serve as an excellent platform for growing our credit card business."

Chinese banks including CCB, China Merchants Bank (600036.SS) (3968.HK) and Industrial and Commercial Bank of China (ICBC) (1398.HK)(601398.SS) are expanding abroad as western rivals shrink overseas operations due to the global financial crisis.

AIG, stricken by the crisis, has stepped up plans to list its Asian subsidiary through an IPO, to help repay some of the $180 billion in bail-out money from the U.S. government.

AIG failed to sell a large stake in American International Assurance Co Ltd (AIA), its Asia life insurance unit earlier this year. The company, once the world's biggest life insurer, has also been seeking buyers for its Taiwan unit Nan Shan Life.

Buying AIG Finance would help CCB to expand in Hong Kong by significantly increasing the customer base as well as market share in the consumer banking market, the Chinese lender said.

AIG Finance, which sells credit cards and operates as a restricted license bank, has more than 500,000 customers and employs about 350 people.

The company has total net loan receivables of HK$4.8 billion and has HK$1 billion in retail deposits, the statement said.

(US$1=6.832 Yuan)