Big bank deal backed

Source: Xinhua  |   2008-6-29  |     NEWSPAPER EDITION

CHINA Merchants Bank shareholders have approved a share purchase worth more than 17 billion yuan (US$2.5 billion) in the Hong Kong-based Wing Lung Bank.

Earlier this month, CMB announced signing an agreement with Wing Lung Bank on an equity purchase, under which it would invest 17.2 billion yuan, or 2.91 times Wing Lung Bank's audited net assets last year, to buy 53.12 percent of its equity.

At Friday's general shareholders meeting, 91 percent of shareholders agreed with the deal, providing the lender with greater access to the Hong Kong market, said yesterday's Shanghai Securities News.

The move made CMB, the country's sixth biggest lender, only one step from securing a controlling stake in the 75-year-old family-run Hong Kong lender. It is awaiting approval from the banking regulator.

Shareholders also authorised CMB to complete the deal with internal resources and to float 30 billion yuan in domestic and international subordinated bonds to enhance its adequacy ratio.

Ma Weihua, CMB's president, said Wing Lung Bank had a good management team and many high-end customers. This was in line with CMB's development strategy. Combining the two companies' business could greatly complement each other as CMB had set a global goal.

Experts predicted CMB's adequacy ratio would still stand at 8 percent after the deal. Wing Lung is the fourth biggest bank in Hong Kong.