Banking News
- No interference in bank
Date: 21-Nov-2007 Sources: (People's Daily)
BOC Hong Kong (Holdings) Ltd yesterday said its purchase of a 4.9 percent stake in Bank of East Asia Ltd (BEA) will remain a financial investment.
'At this point in time, we don't contemplate any further transaction which involves Bank of East Asia,' BOC Hong Kong spokeswoman Clarina Man was quoted by Bloomberg as saying.
The company announced on Monday that it paid HK$3.95 billion for a 4.9 percent stake in BEA, Hong Kong's third largest bank.
The acquisition, which is equivalent to 4.7 percent of BOC Hong Kong's total reported equity as of June 30, was primarily made to diversify BOC Hong Kong's investment portfolio, analysts said.
'It is unlikely to significantly affect the banks' management and financial profiles. BOC Hong Kong does not plan to have a representative on BEA's board or to involve itself in the management or operation of BEA. Both banks will continue to be run independently,' Standard & Poor's credit analysts Liao Qiang and Terry Sham said.
Ricky Cheung, executive and vice-president of Enlighten Securities and Futures, said the deal can create a win-win situation for both parties. 'BOC Hong Kong can make use of BEA's network to explore overseas markets, while the latter could deepen its mainland business.'
BOC Hong Kong is 65.8 percent owned by Bank of China. The Hong Kong company's shares slumped 2.84 percent to close at HK$19.18 yesterday. BEA shares gained 4.77 percent to close at HK$50.55.
On August 2, BEA reported a 20 percent increase in first-half profits and raised its forecast for the share of earnings coming from the mainland. The bank, which was one of the earliest overseas lenders to set up a local incorporation on the mainland, has 14 branches, 26 sub-branches and four representative offices.
BEA shares have fared worse than other financial stocks on the Hang Seng since July 19, when the US Securities and Exchange Commission alleged Chairman David Li may have broken securities laws.
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