Hang Seng, Hong Kong's third largest bank, has announced it will
buy a 20 percent stake in Yantai City Commercial Bank in Shandong
province for 800 million yuan.
That would be the bank's second mainland purchase after its
acquisition of a 16 percent stake in Industrial Bank based in
Fujian province in 2004.
Analysts said the move would help Hang Seng Bank to tap the
rising Bohai Rim region, which is believed to be the third economic
driver after the Pearl River Delta and the Yangtze River Delta.
The deal will help Hang Seng Bank become the largest shareholder
of Yantai City Commercial Bank, though it is yet to be cleared by
the mainland banking regulator and shareholders of Yantai City
Commercial Bank.
"Bringing in Hang Seng as a strategic investor will facilitate
the sharing of experience, enhance corporate governance and promote
a better business structure. This will help us to achieve
international standards and enhance our market competitiveness,"
said Zhang Guangbo, vice-mayor of Yantai.
Yantai City Commercial Bank was founded in 1997. According to
the bank's official website, its current registered capital is
about 1 billion yuan.
It recorded a 34 percent growth in gross profit to about 100
million yuan in 2007.
Hang Seng now has eight branches and 11 sub-branches on the
mainland that are mainly located in the Pearl River Delta and the
Yangtze River Delta.
The purchase of Yantai City Commercial Bank enables Hang Seng to
tap the rapid economic growth of the Bohai economic region as well
as enlarge its total investment on the mainland to 7.3 billion
yuan.
Vice-chairman and chief executive of Hang Seng Bank Raymond Or
had earlier said the bank was adopting a two-pronged strategy in
exploring the mainland market - organic growth and acquisition.
"We have been busy seeking acquisition opportunities over the
past 18 months banks, securities houses, insurers and
asset-management firms are all on our radar," he said.
Enlighten Securities and Futures Vice-President Ricky Cheung
said the purchase would strengthen Hang Seng's mainland business in
the long term. "But the mainland banking industry is suffering from
a fear of tightening control, so the acquisition will not be an
immediate booster."
Another Hong Kong lender, Wing Lung Bank, also announced it will
purchase a 4.99 percent stake in Yantai City Commercial Bank for
200 million yuan.
The introduction of Hang Seng and Wing Lung Bank brings overseas
shareholding of Yantai City Commercial Bank to 24.99 percent, just
below the stipulated ceiling of 25 percent.
(China Daily February 1, 2008)
