Yue Xiu close to acquiring Chong Hing
Agreement to buy Hong Kong bank may be announced this week, sources say
Yue Xiu, an investment arm of Guangzhou's city government, is nearing an agreement to acquire Hong Kong lender Chong Hing Bank, according to three people with knowledge of the matter.
An announcement may come as early as this week, they said.
Chong Hing shares jumped 7 per cent yesterday to close at a record-high HK$37.40 giving the bank a market value of HK$16.3 billion. The market fell 1.36 per cent.
The first acquisition of a Hong Kong lender since 2009 would give Yue Xiu a network of 53 branches, handing it a platform to provide offshore financing for mainland companies.
Chong Hing, which named Lau Wai-man as the first chief executive from outside the founding Liu family last year, said in August it had been approached by prospective bidders.
"If Yue Xiu can gain a bank, it will be easier for them to offer cross-border financing," said Samuel Ng, an analyst at Daiwa Capital Markets. "There's room to expand that business."
Hong Kong's role as an international centre for trade in yuan has attracted mainland financial institutions seeking to expand abroad, including China Merchants Bank, which paid US$4.7 billion for the Wu family's Wing Lung Bank in a deal completed in 2009.