* OCBC offer is double Wing Hang's book value
* Wing Hang trades at price-to-book ratio of 1.84
* Wing Hang shares rose by 44.6 percent in 2013
* Deal could value bank at $5.3 billion
By Clare Jim and Denny Thomas
Jan 3 Singapore's Oversea-Chinese Banking Corp
(OCBC) has begun exclusive talks to buy Hong Kong's
Wing Hang Bank in a deal that would value the
family-run lender at about $5.3 billion, two people familiar
with the matter told Reuters.
OCBC, Singapore's No. 2 lender by assets, has offered about
twice Wing Hang's book value, the sources said. Final terms are
still being negotiated, they added, but it remains unclear when
the parties are likely to clinch a deal. Binding bids were due
A successful deal would help OCBC to bridge the gap with its
bigger rival DBS Group Holdings, which has a larger
presence in North Asia. Wing Hang Bank was founded as a money
changing business in 1937 by the late Y.K. Fung but has grown
into a mainstream retail bank with more than 70 outlets in Hong
Kong, Macua and China.
Wing Hang said in September that its biggest shareholders
had received preliminary offers from un-named independent third
parties, putting the bank in play. Hong Kong's Fung family and
BNY International Financing Corp are the biggest
shareholders with a combined 45 percent stake.
Reuters previouly reported that the sale process had
attracted interest from suitors including Agricultural Bank of
China, Australia and New Zealand Banking Group
and Singapore's United Overseas Bank. But
Wing Hang's high price expectations prompted many to drop out of
Wing Hang currently trades at a price-to-book ratio of 1.84,
Thomson Reuters data show. Its book value is HK$20.4 billion
($2.63 billion), according to the latest published data.
GATEWAY TO CHINA
Hong Kong is Asia's sixth-biggest bank loan market and is
attractive to foreign lenders keen to tap into the fast-growing
offshore yuan fixed-income market. Hong Kong also offers a
gateway into mainland China as a major source of financing for
At the same time, some large shareholders in Hong Kong's
domestic banks, struggling to counter the dominance of big
international players such as HSBC, Standard Chartered
and leading Chinese lenders, are using the recent rally
in banking shares to cash out of the sector.
Wing Hang shares rallied 44.6 percent in 2013, against a
12.3 percent rise in the benchmark Hong Kong share index,
partly driven by takeover speculation. On Friday Wing Hang
shares rose 0.2 percent to close at HK$117.20.
A Wing Hang sale would be the second big Hong Kong banking
acquisition within a few months. In October the trading arm of
China's Guangzhou city government agreed to buy three quarters
of Chong Hing Bank for about $1.5 billion, the first such
takeover since the $4.7 billion deal for Wing Lung Bank by China
Merchants Bank in 2008.
Bloomberg earlier reported that OCBC had submitted a binding
bid to buy Wing Hang, citing sources familiar with the matter.
OCBC declined to comment on Friday, while Wing Hang did not
reply immediately to an email seeking comment.
Wing Hang Bank is being advised by Goldman Sachs Group
and Nomura Holdings, while Bank of America Corp
is advising OCBC, sources told Reuters.