Exclusive: BOC Hong Kong considering sale of $6 billion bank unit - sources
By Denny Thomas and Engen Tham
HONG KONG/SHANGHAI (Reuters) - Lender BOC Hong Kong Holdings Ltd (2388.HK: Quote) is considering a sale of subsidiary Nanyang Commercial Bank (NCB) that could fetch about $6 billion, in a bid to stop cannibalizing the China business of its parent, people familiar with the matter said.
BOC Hong Kong is a unit of Bank of China Ltd (3988.HK: Quote), the fourth-biggest lender by assets in the mainland, and a sale of NCB will help streamline the group's operations in the country, the people said. As of June last year, half of NCB's total loans were to customers in China, according to ratings agency Moody's.
An elimination of overlapping businesses could come as a boost for state-controlled Bank of China (601988.SS: Quote) which has seen a slowdown in profit growth and an increase in bad loans as China's economic growth weakens.
At $6 billion, any sale would be Asia Pacific's No. 3 bank deal of all time, according to Thomson Reuters data, behind Australia's Westpac Banking Corp's (WBC.AX: Quote) $17.9 billion purchase of St George Bank and Bank of America Corp's (BAC.N: Quote) $7 billion buying of a stake in China Construction Bank (601939.SS: Quote), both in 2008.
One potential buyer interested in NCB is China Cinda Asset Management Co Ltd (1359.HK: Quote), the nation's No. 2 bad debt manager that listed in Hong Kong in December 2013, the people said.
China Cinda has been keen to buy a bank, as unlike its biggest rival Huarong Asset Management, Cinda does not own a bank, one of the people said. Having a bank will help China Cinda to tap cheap sources of funds to buy soured loans.
"We don't comment on market speculation," a BOC Hong Kong spokeswoman said in an e-mailed statement.
Later on Thursday, BOC Hong Kong issued a statement to the Hong Kong stock exchange saying it was conducting a feasibility study to review its group's business and assets portfolio, though it might or might not lead to any disposal of assets. Continued...