May 29, 2015 / 11:09 AM / 4 years ago

Bank of China unit shortlists bidders for $6.8bln Nanyang sale-sources

HONG KONG, May 30 (Reuters) - Bank of China Ltd’s Hong Kong-listed unit has shortlisted at least four bidders, including New China Life Insurance Co, for the sale of Nanyang Commercial Bank valued at about $6.8 billion, people familiar with the matter said on Friday.

China Cinda Asset Management Co Ltd and unlisted Yue Xiu Group, which last year bought Hong Kong lender Chong Hing Bank, are among the other bidders, the people added. China Taiping Insurance Holdings Co Ltd has also progressed to the next round, one person said, though that could not be independently verified.

BOC Hong Kong Holdings Ltd, which is controlled by Bank of China, the nation’s No. 4 lender by assets, has put Nanyang Commercial Bank on the block as the two compete for the same business in mainland China, and the sale would end this anomaly.

Nanyang has a book value of about $4.5 billion and it could be sold for about 1.5 times price-to-book (P/B), giving it a value of $6.8 billion. Hong Kong’s last bank M&A was done at about two times P/B, when Singapore’s Oversea Commercial Bank of China bought Wing Hang Bank Ltd for about $5 billion last year.

Buying Nanyang, which earned around HK$2.8 billion ($361 million) of profit in 2014, will help the acquiring Chinese financial institution establish a stronger foothold in Hong Kong, which is seen as a gateway to potential global expansion.

Bank of China and BOC HK said in a joint statement last week that the sale of Nanyang would “enable a better allocation of resources of the group”.

A BOC HK spokeswoman had no further comment from last week’s statement.

New China Life Insurance, Yue Xiu Group and China Taiping Insurance could not be immediately reached for comment. China Cinda Asset Management declined to comment.

Sources declined to be identified as the information is not public. ($1 = 7.7504 Hong Kong dollars) (Reporting by Denny Thomas in HONG KONG, Engen Tham in SHANGHAI, Shu Zhang in BEIJING and Shanghai Newsroom; Editing by Alison Williams)

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