China Cinda Asset Management made clear early on Thursday its intentions to pick up banking licences in both Hong Kong and China with the possible acquisition of Nanyang Commercial Bank.
Cinda said its wholly owned Cinda Financial Holdings was the only firm that had made an application to the Beijing Financial Assets Exchange by the August 25 deadline to bid on NCB, which is being sold by Bank of China (Hong Kong) for an asking price of HK$68 billion.
Shares in the bad debt manager in Hong Kong fell by more than 9 per cent early on Thursday on the announcement.
The statement from Cinda ended months of speculation on the company's interest in the small commercial lender and highlighted its drive to pick up more financial licences across different jurisdictions ahead of reform to financial regulation on the mainland.
"Most Chinese financial companies want to diversify because there is an expectation that China will change its policy to allow banks to get into other businesses, like banks into securities broking or insurers into banking," said Kenny Tang Sing-hing, general manager of the securities and asset management division of AMTD Financial Planning in Hong Kong.
NCB had banking licences in Hong Kong and China, making its acquisition valuable for companies looking to expand both onshore and offshore. The licence in Hong Kong was particularly hard to get, Tang said.