BOC Hong Kong considering sale of $6 bln bank unit: sources

Thu Jan 29, 2015 9:03pm EST
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By Denny Thomas and Engen Tham

HONG KONG/SHANGHAI (Reuters) - Lender BOC Hong Kong Holdings Ltd 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 , the fourth-biggest lender by assets in the mainland, and selling NCB will help streamline the group's operations in the country, the people said. A $6 billion sale would make it Asia-Pacific's third-biggest bank deal, according to Thomson Reuters data.

An elimination of overlapping businesses could come as a boost for state-controlled Bank of China which has seen a slowdown in profit growth and an increase in bad loans as China's economic growth weakens..

As of June last year, half of NCB's total loans were to customers in China, according to ratings agency Moody's.

One potential buyer interested in NCB is China Cinda Asset Management Co Ltd, 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 tap cheap sources of funds to buy soured loans.

The sources declined to be identified as the discussions were confidential.

BOC Hong Kong said in a statement to the Hong Kong stock exchange on Thursday that it was conducting a feasibility study to review its group's business and assets portfolio, which may or may not lead to a disposal of assets.   Continued...

The Bank of China Tower is seen at Hong Kong's business Central district in this December 26, 2014 file photo. REUTERS/Tyrone Siu/Files