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OCBC to acquire Wing Hang Bank
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OVERSEA-CHINESE Banking Corp, the second-biggest bank in Southeast Asia, plans to acquire Wing Hang Bank for HK$38.4 billion (US$5 billion) to capitalize on China’s economic growth with a broader funding base.
OCBC will pay HS$125 a share to buy the entire Hong Kong-based Wing Hang in cash through it subsidiary OCBC Pearl Ltd, the bank said in a statement today.
The transaction is still subject to regulatory approvals due in June. It will be the largest takeover of a Hong Kong bank since Development Bank of Singapore (DBS), OCBC’s major competitor, acquired Dao Heng Bank for HK$41.9 billion in April 2001.
“It’s a fair and equitable deal, which recognizes what Wing Hang has built up and what we can add to,” Samuel Tsien, group chief executive officer of OCBC, told a press conference in Hong Kong today.
“From a prudent capital management perspective, funding of the transaction will be a combination of debt and capital. We have intentions to delist Wing Hang after the deal is completed. And there’s no plan to dispose any properties that Wing Hang holds,” said Tsien.
The completion of the transaction will raise OCBC’s profit contribution from China to 16 percent from previous 6 percent, according to the statement.
The deal will boost OCBC’s network on China’s mainland, according to the statement, which is expected to include 31 outlets in 13 cities.
Tsien said the bank has plans to further expand the network on the mainland without giving a specific number or timetable. However its focus will be on four key regions including Yangtze River Delta, Pearl River Delta, Bohai Rim and West China.
The Singapore-based bank has entered into an agreement to raise its interest in Bank of Ningbo to 20 percent from current 15.3 percent this year.
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