Singapore's OCBC to buy Hong Kong's Wing Hang Bank for $4.95 bn

Singapore's Oversea-Chinese Banking Corp Ltd (OCBC), the country's third-largest bank, has offered to buy Hong Kong's sixth-biggest lender by assets Wing Hang Bank, for HK$38.428 billion ($4.95 billion).

OCBC's wholly-owned subsidiary OCBC Pearl Ltd has offered Hong Kong Stock Exchange-listed Wing Hang HK$125 per share in cash, a premium of approximately 1.6 per cent to the last closing price of HK$123.

The deal was reached after major shareholders including the founding Fung family of Wing Hang agreed to the transaction after months of negotiations.

OCBC said that it has received irrevocable undertakings for its offer from Wing Hang's largest shareholders holding 44.79 per cent, including the Fung family and BNY International Financing Corporation and certain other WHB shareholders holding 3.37 per cent.

The offer is conditional to OCBC receiving more than 50 per cent of WHB shares.

The acquisition of Wing Hang will strengthen OCBC's presence in its four core markets – Singapore, Malaysia, Indonesia and the Greater China region, which includes China, Hong Kong, Macau and Taiwan.

Wing Hang Bank was founded in 1937 in Guangzhou as a money changer. After the Second World War it re-established itself in Hong Kong and was granted a banking licence in 1960.

In 1973, the Irving Trust Company of New York purchased a majority interest in the Bank and in 1988 Irving Trust merged with The Bank of New York Group (now The Bank of New York Mellon Corporation) to become the 10th largest bank in the US.

Wing Hang was publicly listed on the Hong Kong Stock Exchange in 1973 and went on to acquire Chekiang First Bank in 2004 and Inchroy Credit Corporation in 2007.

As at 30 June 2013, Wing Hang has total assets of over HK$201.1 billion and has 70 branches spread across Hong Kong, Macau and China.

Its business in secured and unsecured SME banking in Greater China will complement OCBC China's current focus on corporate banking.

OCBC said that since Hong Kong is a leading North Asia hub for wealth management, ''Wing Hang also presents OCBC Bank with significant opportunities in private banking for Bank of Singapore.''

''Wing Hang is a solid franchise with distinctive product capabilities, an impressive network and strong customer base. It is a strategic component of our Greater China strategy. Without the opportunity presented by this potential acquisition, I would expect OCBC to take a much longer period of time, and encounter greater challenges with less certainty of success, before we can fully benefit from the continuing internationalisation of the Renminbi and other developments in Greater China,'' said Samuel Tsien, CEO of OCBC.