Kwong On Bank's controlling shareholder - Japan's Fuji Bank - is negotiating the sale of its 50.13 per cent stake, estimated to be worth about $996 million.
Kwong On shares shot up 80 cents to $5.30 yesterday before trading was suspended and the company announced Fuji Bank was 'in preliminary discussions with certain leading financial institutions about the possible disposal . . . of its entire shareholding in the bank'.
Analysts said the announcement had been expected in light of Fuji Bank's massive restructuring programme.
The banking giant's shares are worth a fraction of what they were a year ago as recession bites and the Japanese Government faces opposition to its plans to reform the country's fragile financial system.
Fuji Bank yesterday revealed it had 2.56 trillion yen (about HK$148.02 billion) in problem loans not covered by loan-loss reserves as of March 31.
'Fuji Bank has talked about reducing its stake for some time so the announcement comes as no surprise,' one banking analyst said.