Singapore's Oversea-Chinese Banking Corp has begun exclusive talks to buy Hong Kong's Wing Hang Bank (0302.HK: Quote, Profile, Research) in a deal that would value the family-run lender at about $5.3 billion, two people familiar with the matter told Reuters.
OCBC, Singapore's No. 2 lender by assets, has offered about twice Wing Hang's book value, the sources said. Final terms are still being negotiated, they added, but it remains unclear when the parties are likely to clinch a deal. Binding bids were due in mid-December.
A successful deal would help OCBC to bridge the gap with its bigger rival DBS Group Holdings (DBSM.SI: Quote, Profile, Research), which has a larger presence in North Asia. Wing Hang Bank was founded as a money changing business in 1937 by the late Y.K. Fung but has grown into a mainstream retail bank with more than 70 outlets in Hong Kong, Macua and China.
Wing Hang said in September that its biggest shareholders had received preliminary offers from un-named independent third parties, putting the bank in play.
Hong Kong's Fung family and BNY International Financing Corp (BK.N: Quote, Profile, Research) are the biggest shareholders with a combined 45 per cent stake.
Reuters previously reported that the sale process had attracted interest from suitors including Agricultural Bank of China, Australia and New Zealand Banking Group and Singapore's United Overseas Bank. But Wing Hang's high price expectations prompted many to drop out of the auction.
Wing Hang currently trades at a price-to-book ratio of 1.84, Thomson Reuters data show. Its book value is HK$20.4 billion ($2.63 billion), according to the latest published data.