OCBC makes 'binding bid for HK bank' valued at $5.8b

OCBC makes 'binding bid for HK bank' valued at $5.8b

SINGAPORE - OCBC is reported to have lodged a binding bid for a family-run bank in Hong Kong valued at US$4.6 billion (S$5.8 billion), a deal that would be its biggest- ever acquisition.

It could also be the largest purchase by a local bank since DBS Bank bought Hong Kong's Dao Heng Bank for US$5.8 billion in 2001.

Speculation had been swirling since October last year that OCBC was pondering making an offer for Wing Hang alongside other potential suitors, which included United Overseas Bank and Agricultural Bank of China.

OCBC declined to comment on Friday.

Analysts said the bank was likely hoping to snag a bigger slice of the fast-growing yuan currency market, but they warned that it risked overpaying given the stiff competition and low margins in Hong Kong's banking industry.

Wing Hang Bank, one of four remaining family-owned banks in Hong Kong, has a market value of US$4.6 billion.

OCBC is said to have offered less than the two times book value that Wing Hang was seeking, according to a Bloomberg report on Friday which cited anonymous sources.

OCBC gets nearly two-thirds of its revenue from Singapore and is looking to expand in Malaysia, Indonesia and China.

Chief executive Samuel Tsien hinted at a results briefing in November last year that it was eyeing a possible acquisition in Hong Kong.

"Hong Kong is part of Greater China, and China is driving a lot of the economic activities across Asia and other parts outside of Asia. That's a market that people will pay attention to," Mr Tsien said then, as the bank unveiled a better-than-expected third-quarter net profit of $759 million.

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