UPDATE 2-HK's Bank of East Asia to review assets, halting legal battle with Elliott

* Hires Goldman Sachs for review of business portfolios, assets

* Elliott to apply for a stay of judicial proceedings

* Shares rise 4% after the review announcement (Adds BEA results, context, updates share price)

HONG KONG, March 4 (Reuters) - Hong Kong-based Bank of East Asia Ltd (BEA) has agreed to carry out a review of its business portfolios and assets with the support of activist investor Elliott Management, pausing four-year-old legal proceedings demanding change at the lender.

The review will focus on identifying potential transactions that “would enhance the value of the Bank’s existing businesses and assets, as well as strategic alternatives for potentially non-core assets,” BEA said in a statement on Wednesday.

A long-running dispute between U.S. hedge fund Elliott and the bank’s directors was due to be heard in a seven-week hearing in a Hong Kong court in early May. BEA in its statement said Elliott would apply for a pause of those proceedings.

The announcement sent BEA shares up as much as 4%.

Elliott has an 8% stake in BEA, showed filings to Hong Kong’s stock exchange. It previously urged the bank - whose main markets are Hong Kong and mainland China - to explore putting itself up for sale in an open letter to shareholders, in which it also said BEA was poorly run.

The hedge fund also filed a lawsuit against the bank to protest a share placement.

The looming court proceedings had focused the parties’ attention and contributed to bringing them to the table, said a person familiar with the situation.

BEA has survived as an independent lender in a market that is dominated by majors HSBC Holdings PLC, BOC Hong Kong Holdings Ltd and Standard Chartered PLC, while several of Hong Kong’s other family-owned firms have been put up for sale amid deteriorating business conditions.

Elliott’s lawsuit against the bank and executives including Chairman David Li - whose grandfather founded the bank over 100 years ago - has weighed on the outlook for Hong Kong’s last big family-run bank in recent years.

Wednesday’s announcement comes against the backdrop of a worsening outlook for Hong Kong banks with the city’s economy last year posting its first annual decline since 2009 following months of anti-government protests.

Compounding matters is the impact of the ongoing coronavirus outbreak.

BEA’s profit halved in 2019 due to a significant rise in impairment loss in its mainland China business.

The bank said in the statement it has hired Goldman Sachs to assist with the review, and that it will give an update about the process by June 30.

Jonathan Pollock, co-chief executive and chief investment officer of Elliott, expressed support for the review in BEA’s statement.

An Elliott spokeswoman said the U.S. hedge fund had nothing further to add to BEA’s statement.

Reporting by Alun John and Sumeet Chatterjee; Editing by Tom Hogue and Christopher Cushing