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Don Weinland

Hang Seng Bank will sell off about half of its holdings in Shanghai-listed Industrial Bank, raising up to HK$15.79 billion and boosting the bank’s regulatory capital.
Hang Seng Bank said in a stock exchange filing late  on Tuesday that it had entered into a placing agreement with institutional investors to sell a 5 per cent stake in the mainland bank, or 952.6 million shares for 13.36 yuan per share. That would leave Hang Seng with a stake of 5.87 per cent.
The statement did not name or give the number of investors in the deal.
Rumours of a selloff have circulated for weeks. On February 3, Hang Seng said in a regulatory filing that no decision had been made on such a transaction.
The announcement from Hang Seng came after the market closed on Tuesday. Industrial Bank shares climbed by about 1.8 per cent to 14.37 yuan.
Analysts said Industrial Bank’s choppy share price in recent days and Tuesday’s price rise indicated that news of the selloff had been leaked before it was officially announced.
Hang Seng said the move was aimed, in part, at cashing in on an investment made more than 10 years ago.
The selloff “represents an opportunity to realise part of its investment in Industrial Bank, taking into account the current market conditions in the A-share market”, the bank said.
The mainland’s stock market has increased by more 50 per cent in value over the past 12 months, although prices have come down over the past month. The market value of many mainland banks and other financial companies soared last year, with some doubling in value.
Hang Seng Bank bought a 15.98 per cent stake in Industrial Bank in 2004 for HK$1.62 billion. A rights issue in 2010 reduced the size of the stake.
The bank also noted in the filing that it was looking to shore up its regulatory capital position, following other banks as regulators in Hong Kong look to put Basel III measures in place that could include raising requirements for common equity.
“There’s not an impact for Industrial bank. Hang Seng was not running the show,” said Ismael Pili, a banks analyst at Macquarie Securities in Hong Kong.
“But [the selloff] will definitely add to Hang Seng’s capital ratio. That’s the story here for me.”
Pili said the Hong Kong Monetary Authority could require banks to post a 9 per cent common equity tier-1 ratio, up from the 7 per cent recommended in Basel III.
Investors in the deal would be subject to a 90 day lock-up period on the shares in Industrial Bank, the filing said.


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Hang Seng Bank

Hang Seng Bank sells off HK$15.79 billion stake in Industrial Bank

A branch of Hang Seng bank in Hong Kong. The bank sold half of its holdings in Shanghai-listed Industrial Bank. Photo: May Tse

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