The lender is looking to expand and fears Dah Sing might be in the running Mid-tier lender Wing Hang Bank yesterday confirmed it had made a bid for Chekiang First Bank as consolidation in Hong Kong's banking sector gathers pace. Wing Hang officials declined to elaborate, but an industry source said yesterday the bank was considering further acquisitions, leveraging on an expanded asset base from a successful bid. The source said Wing Hang was concerned about a potential rival bid by Dah Sing Bank which, according to Chinese-language newspaper reports, is also interested in buying unlisted Chekiang First Bank from its sole owner, Japan's Mizuho Financial Holdings. Dah Sing and Wing Hang are of a similar size and a successful bid for Chekiang First Bank by either would give it the resources to acquire another mid-tier lender - possibly the loser in the bidding battle. 'Whoever is successful in purchasing Chekiang First Bank could then buy the bank that failed to do so and become a very big bank in a short period of time,' the source said. Such a plan, if realised, would be another step in the consolidation process in Hong Kong's financial sector, with small lenders disappearing from the landscape due to the cut-throat environment. Wing Hang was founded in 1937 in Guangzhou by Y.K. Fung. Patrick Fung Yuk-bun, son of the founder, is chairman and chief executive. The bank is 20 per cent jointly owned by Patrick Fung, brother Michael Fung and brother-in-law Louis Ho. The Bank of New York also has a 25 per cent stake. As of last year, Wing Hang had total assets of US$7.34 billion, while Chekiang First Bank's amounted to $3.56 billion. A combined entity would therefore have assets of close to $11 billion. Mizuho Financial Holdings, the world's largest bank in terms of assets, is seeking to focus on its core businesses. Wing Hang said yesterday it had yet to receive a response from the Japanese bank. The source said Wing Hang had decided to enter the bidding process to expand its asset base, taking it closer to meeting the requirements to operate in China before the closer economic partnership arrangement (Cepa) came into effect next year. 'The decision was made before details of Cepa [between Hong Kong and the mainland] were announced,' the source said. 'It was thought the asset requirement was to be lowered to US$10 billion, when in fact it was lowered to $6 billion.' In the face of weak loan demand, declining margins and fierce competition, Hong Kong's crowded banking sector has been crawling towards consolidation in recent years. DBS Vickers banking analyst Tony Liu said some lenders might look for strategic ties with mainland banks through equity stake sales. 'Mid-sized local banks with an established presence on the mainland would become takeover targets for other banks without existing mainland links or prior mainland experience,' he said. Wing Hang has one Shenzhen branch with a licence to conduct yuan business and two representative offices in Guangzhou and Shanghai, which could be upgraded to full branches under Cepa next year. Shares in Wing Hang fell 2.2 per cent yesterday to HK$29 due to profit taking, analysts said.