SINGAPORE – Oversea-Chinese Banking Corp Ltd (OCBC) has offered to pay almost US$5 billion (S$6.24 billion) for one of Hong Kong’s last remaining family-owned banks, in a deal that would give the Singapore lender a much sought-after gateway to the Greater China region.
The deal to buy Wing Hang Bank Ltd was preceded by months of negotiations, with the deadline for an agreement extended not once, but twice. OCBC formally made the offer to purchase the Hong Kong-based lender after reaching a deal with major shareholders including the bank’s founding family.
OCBC, like other foreign lenders, are drawn to China’s economic clout and the growth of its offshore yuan markets. Wing Hang, headquartered in Hong Kong, has branches in Shenzhen, Guangzhou and Macau – major hubs in the prosperous and bustling Pearl River Delta.
The acquisition, OCBC’s biggest, would also help the Singapore lender narrow the gap with domestic rival DBS Group Holdings, which operates Hong Kong’s sixth-biggest bank by assets.
At the same time, China’s economic growth is slowing, prompting concerns about Hong Kong’s loan exposure to Chinese companies, particularly those in industries that are suffering.
OCBC would also be entering a highly competitive space dominated by mainland banks and global lenders such as Standard Chartered PLC and HSBC. OCBC said it would retain the name of Wing Hang, founded in 1937.
Still, Wing Hang’s sale process had attracted interest from suitors including Agricultural Bank of China, Australia and New Zealand Banking Group and Singapore’s United Overseas Bank.
OCBC is offering HK$125 (S$20.30) a share to buy all the stock of Wing Hang, according to a joint announcement on Tuesday.
The offer came after Singapore’s second-biggest lender reached a deal with members of Wing Hang’s founding Fung family, their affiliates and related family trusts, as well as BNY International Financing Corp, to buy a nearly 45 per cent stake in the bank. OCBC also reached separate deals with other shareholders, increasing its stake to 50.66 per cent.
“The deal ultimately will also depend on whether the other shareholders will accept this at this price or not,” OCBC CEO Samuel Tsien told reporters in Singapore on Tuesday. “We are of the opinion that the price to be paid is fair and equitable.”
OCBC has received in-principle approval for the purchase from Hong Kong and Singapore regulators, with formal approval needed by June 30 for the deal to go through. The acquisition is not subject to the approval of OCBC’s shareholders.
If the deal goes through, there will be two family-owned banks left in Hong Kong – Bank of East Asia Ltd and Dah Sing Banking Group Ltd.
Singapore"s OCBC offers $6.24 billion for Wing Hang Bank in bet on China growth
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