OCBC targets China business after Wing Hang deal

Oversea-Chinese Banking Corp, Southeast Asia's second-largest bank by assets, is confident that its proposed acquisition of Wing Hang Bank will be completed by the third quarter of this year despite some growing concerns about the deal's valuation.

Can Singaporean banks win more business in Hong Kong or even in the much bigger mainland market simply through high-cost acquisitions?

Credit rating agency Fitch Ratings has placed Oversea-Chinese Banking Corp, Southeast Asia's second-largest lender, on negative watch, citing higher potential exposure to China, after the bank announced a HK$38.4 billion takeover of Hong Kong's Wing Hang Bank.

Oversea-Chinese Banking Corp, Southeast Asia's second-largest lender, has offered HK$38.4 billion to fully acquire Wing Hang Bank, the eighth-largest lender in Hong Kong, to tap into increasing money flows between Southeast Asia and China.

Oversea-Chinese Banking Corp has extended exclusive talks to buy Wing Hang Bank beyond a January 31 deadline, Wing Hang said yesterday. Sources said that while the banks had largely agreed on financial terms, OCBC was seeking a go-ahead from the Hong Kong Monetary Authority before announcing a deal.

Oversea-Chinese Banking Corp's plan to take over Wing Hang Bank, the city's second-largest family-controlled bank, raises the question of what would be a reasonable price for both parties to gain from the deal.

Australia and New Zealand Banking (ANZ), Australia's third-largest bank by market value, aims to build itself into a regional bank in Asia, but an acquisition in Hong Kong is not part of its plans.

Wing Hang Bank's potential suitors may need to pay more than HK$40 billion to take the city's second-largest family-owned bank private. More than three parties were talking to Wing Hang, a person familiar with the situation said.

Anbang Insurance is among companies considering bids for Wing Hang Bank, Hong Kong's second-largest family-run lender, according to sources.

Wing Hang Bank, Hong Kong’s second-largest family-owned lender, which is in takeover talks, would likely have its credit rating downgraded if the acquirer was based on the mainland, Moody’s Investors Service said.

A Wing Hang Bank manager was yesterday found guilty of stealing the personal information of more than 10,000 clients, including borrowing histories, from the bank's computer database.

Singapore's United Overseas Bank and Australia & New Zealand Banking Group are believed to be considering a bid for Hong Kong's Wing Hang Bank. Wing Hang, which has a market capitalisation of US$4.7 billion, announced this month that its controlling shareholders had received preliminary offers from independent third parties to purchase their shares in the bank. It did not name the bidders.

Wing Hang Bank's shares rocketed nearly 40 per cent yesterday after it said its top shareholders had been approached by potential buyers of their stakes, igniting speculation that smaller rival Dah Sing Bank might be next.

Wing Hang Bank, the second-largest family-owned bank in the city by market capitalisation, expects net profit to grow this year as its margins improve.

Succession plans at family-owned banks in the city remain uncertain with top executives at Bank of East Asia and Wing Hang Bank already older than 65 years of age.

Wing Hang declared a final dividend of HK$1.62 per share, which works out to a dividend payout ratio of 35 per cent for last year, up from 25 per cent in 2011.